EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
among
JEFFERSON SMURFIT CORPORATION,
a Delaware corporation,
JSC ACQUISITION CORPORATION,
a Delaware corporation
and a wholly-owned subsidiary of Jefferson Smurfit Corporation,
and
STONE CONTAINER CORPORATION,
a Delaware corporation
Dated as of May 10, 1998
TABLE OF CONTENTS
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Page
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ARTICLE 1
The Merger
Section 1.1. The Merger..............................................2
Section 1.2. Certificate of Incorporation and Bylaws of the
Surviving Corporation...................................3
Section 1.3. Directors and Officers of the Surviving Corporation.....3
Section 1.4. Boards, Committees and Officers of JSC..................3
ARTICLE 2
Conversion of Securities
Section 2.1. Conversion of Capital Stock.............................3
Section 2.2. Exchange of Certificates................................5
ARTICLE 3
Representations and Warranties of Stone
Section 3.1. Organization and Power..................................9
Section 3.2. Corporate Authorization.................................9
Section 3.3. Governmental Authorization.............................10
Section 3.4. Non-Contravention......................................10
Section 3.5. Capitalization.........................................11
Section 3.6. SEC Filings; Financial Statements......................12
Section 3.7. No Undisclosed Liabilities.............................13
Section 3.8. Litigation.............................................13
Section 3.9. Absence of Certain Changes or Events...................13
Section 3.10. Compliance with Laws; No Default; No Non-Competes......14
Section 3.11. Taxes..................................................14
Section 3.12. Intellectual Property..................................16
Section 3.13. Environmental Matters..................................16
Section 3.14. Employee Benefits and Labor Matters....................18
Section 3.15. Transactions with Affiliates...........................20
Section 3.16. Information Supplied...................................21
Section 3.17. Opinion of Financial Advisor...........................21
Section 3.18. Finders' Fees..........................................21
Section 3.19. Takeover Statutes......................................22
Section 3.20. Rights Agreement.......................................22
Section 3.21. Non-Recourse Debt and Obligations......................22
ARTICLE 4
Representations and Warranties of JSC and Sub
Section 4.1. Organization and Power.................................23
Section 4.2. Corporate Authorization................................23
Section 4.3. Governmental Authorization.............................24
Section 4.4. Non-Contravention......................................24
Section 4.5. Capitalization.........................................25
Section 4.6. SEC Filings; Financial Statements......................26
Section 4.7. No Undisclosed Liabilities.............................27
Section 4.8. Litigation.............................................27
Section 4.9. Absence of Certain Changes or Events...................27
Section 4.10. Compliance with Laws; No Default; No Non-Competes......28
Section 4.11. Taxes..................................................28
Section 4.12. Intellectual Property..................................29
Section 4.13. Environmental Matters..................................30
Section 4.14. Employee Benefits and Labor Matters....................31
Section 4.15. Transactions with Affiliates...........................33
Section 4.16. Information Supplied...................................34
Section 4.17. Opinion of Financial Advisor...........................34
Section 4.18. Finders' Fees..........................................34
Section 4.19. Non-Recourse Debt and Obligations......................34
ARTICLE 5
Conduct of Business
Section 5.1. Conduct of Stone.......................................35
Section 5.2. Conduct of JSC.........................................38
ARTICLE 6
Additional Agreements
Section 6.1. No Solicitation........................................41
Section 6.2. Proxy Statement; Registration Statement................43
Section 6.3. Stockholders' Meetings.................................44
Section 6.4. Access to Information..................................44
Section 6.5. Notices of Certain Events..............................45
Section 6.6. Appropriate Action; Consents; Filings..................46
Section 6.7. Public Disclosure......................................48
Section 6.8. Reorganization.........................................48
Section 6.9. Obligations of Sub.....................................48
Section 6.10. Affiliates.............................................49
Section 6.11. Listing or Quotation of Stock..........................49
Section 6.12. Indemnification of Directors and Officers..............49
Section 6.13. Stone Stock Options....................................50
Section 6.14. JSC Stock Options......................................51
Section 6.15. Benefits Continuation, etc.............................51
Section 6.16. Certain Other Employee Benefits Matters................52
Section 6.17. Convertible Debt.......................................52
Section 6.18. Confidentiality Agreement..............................52
Section 6.19. Takeover Statutes......................................53
Section 6.20. Rights Agreement.......................................53
Section 6.21. Headquarters; Logo.....................................53
Section 6.22. Stock Purchase Agreement...............................53
ARTICLE 7
Conditions to Merger
Section 7.1. Conditions to Each Party's Obligations.................53
Section 7.2. Additional Conditions to Obligations of JSC and Sub....54
Section 7.3. Additional Conditions to Obligations of Stone..........55
ARTICLE 8
Termination
Section 8.1. Termination............................................56
Section 8.2. Effect of Termination..................................58
Section 8.3. Fees and Expenses......................................59
Section 8.4. Amendment..............................................60
Section 8.5. Extension; Waiver......................................60
ARTICLE 9
Miscellaneous
Section 9.1. Nonsurvival of Representations, Warranties and
Agreements.............................................61
Section 9.2. Notices................................................61
Section 9.3. Interpretation.........................................62
Section 9.4. Disclosure Schedules...................................62
Section 9.5. Counterparts...........................................62
Section 9.6. Entire Agreement; No Third Party Beneficiaries.........63
Section 9.7. Governing Law..........................................63
Section 9.8. Assignment.............................................63
EXHIBITS
Exhibit A - JSC Voting Agreement (SIBV)
Exhibit B - JSC Voting Agreement (MSLEF)
Exhibit C - Stone Voting Agreement
Exhibit ▇ - ▇▇▇▇▇ Charter Amendments
Exhibit E - Corporate Governance
Exhibit F - Registration Rights Agreement
Exhibit G - Form of Affiliate's Letter
TABLE OF DEFINED TERMS
Term Section
-------------------------- --------------
Adjusted Option 6.13(a)(i)
Affiliate 3.15
Affected Employees 6.15(a)
Certificate 2.02(b)
Closing 1.01(b)
Closing Date 1.01(b)
Code Recitals
Confidentiality Agreement 6.04
Convertible Debentures 3.05(a)
Convertible Notes 3.05(a)
DGCL 1.01(a)
Effective Time 1.01(c)
End Date 8.01(b)
Environmental Laws 3.13(b)(i)
ERISA 3.14(a)
Exchange Act 3.03
Exchange Agent 2.02(a)
Exchange Fund 2.02(a)
Exchange Ratio 2.01(c)
Former Employees 6.15(b)
Governmental Authority 3.03
Hazardous Substance 3.13(b)(ii)
HSR Act 3.03
Indemnified Parties 6.12(b)
IRS 3.11(c)
JSC Preamble
JSC Balance Sheet 4.06(d)
JSC Benefit Arrangements 4.13(d)
JSC Common Stock 2.01(c)
JSC Disclosure Schedule Article 4
JSC Employee Plans 4.14(a)
JSC ERISA Affiliate 4.14(b)
JSC Intellectual Property Rights 4.12(a)
JSC Material Adverse Effect Article 4
JSC Material Contracts 4.10(b)
JSC Preferred Stock 4.05(a)
JSC SEC Reports 4.06(a)
JSC Stockholders' Meeting 3.16
JSC Tax Certificate 6.08
JSC Third Party Acquisition Event 8.03(e)
JSC Voting Agreements Recitals
JSG Article 3
Lien 3.05(a)
Merger 1.01(a)
Nasdaq 2.02(e)
NYSE 2.02(e)
Person 2.01(b)
Proxy Statement 3.16
Registration Rights Agreement 4.02
Registration Statement 3.16
Rights 3.20
Rights Agreement 3.05(a)
Rule 145 Affiliates 6.10
SEC 3.06(a)
Securities Act 3.03
SIBV Recitals
Significant Subsidiary 6.01(a)
Stock Purchase Agreement Article 3
Stockholders' Meetings 3.16
Stone Preamble
Stone Balance Sheet 3.06(d)
Stone Benefit Arrangements 3.14(d)
Stone Common Stock 2.01(b)
Stone Disclosure Schedule Article 3
Stone Employee Plans 3.14(a)
Stone ERISA Affiliate 3.14(b)
Stone Intellectual Property Rights 3.12(a)
Stone Material Adverse Effect Article 3
Stone Material Contracts 3.10(b)
Stone Preferred Stock 3.05(a)
Stone SEC Reports 3.06(a)
Stone Series D Preferred Stock 3.05(a)
Stone Series E Preferred Stock 2.01(d)
Stone Stock Options 6.13(a)(i)
Stone Stockholders' Meeting 3.16
Stone Tax Certificate 6.08
Stone Third Party Acquisition Event 8.03(c)
Stone Voting Agreement Recitals
Sub Preamble
Sub Common Stock 4.05(c)
Subsidiary 2.01(b)
Superior Proposal 6.01(b)
Surviving Corporation 1.01(a)
Takeover Proposal 6.01(a)
Takeover Statute 3.19
Tax Return 3.11(e)
Taxes 3.11(e)
Taxing Authority 3.11(e)
Transaction Agreements Article 3
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of May
10, 1998 among Jefferson Smurfit Corporation, a Delaware corporation ("JSC"),
JSC Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of JSC ("Sub"), and Stone Container Corporation, a Delaware
corporation ("Stone").
RECITALS
WHEREAS, the Boards of Directors of JSC, Sub and Stone deem it
advisable and in the best interests of each corporation and its respective
stockholders that JSC and Stone enter into a strategic business combination in
order to advance the long-term business interests of JSC and Stone, and have
therefore approved this Agreement, the Merger (as hereinafter defined) and the
other transactions contemplated by this Agreement; and
WHEREAS, the combination of JSC and Stone shall be effected by
the terms of this Agreement through a transaction in which Sub will merge with
and into Stone, Stone will become a wholly-owned subsidiary of JSC and the
common stockholders of Stone will become stockholders of JSC, which will be
renamed Smurfit-Stone Container Corporation; and
WHEREAS, as a condition and inducement to JSC's and Stone's
willingness to enter into this Agreement, concurrently with the execution and
delivery of this Agreement, (i) Stone and certain stockholders of JSC,
including Smurfit International B.V ("SIBV") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged
Equity Fund II, Inc. ("MSLEF"), are entering into Voting Agreements dated as
of the date of this Agreement in the forms attached hereto as Exhibits A and
B (the "JSC Voting Agreements"), pursuant to which such stockholders have
agreed to vote their shares of JSC Common Stock in favor of the proposal to
issue JSC Common Stock in the Merger and to amend the JSC certificate of
incorporation as contemplated by Section 1.04(a) hereof and (ii) JSC and the
Chief Executive Officer of Stone are entering into a Voting Agreement dated
as of the date of this Agreement in the form attached hereto as Exhibit C (the
"Stone Voting Agreement"), pursuant to which he has agreed to vote his shares
of Stone Common Stock (as hereinafter defined) in favor of the proposal to
approve and adopt the Merger and this Agreement and the amendments to the
Stone certificate of incorporation contemplated hereby; and
WHEREAS, it is intended that, for federal income tax purposes,
the Merger shall qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, JSC, Sub and Stone desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
below, the parties agree as follows:
ARTICLE 1
The Merger
Section 1.1. The Merger. (a) Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as hereinafter
defined), Sub shall be merged (the "Merger") with and into Stone in accordance
with the Delaware General Corporation Law (the "DGCL"), whereupon the separate
existence of Sub shall cease, and Stone shall continue as the surviving
corporation (the "Surviving Corporation").
(b) Upon the terms and subject to the conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place at 10:00 a.m. on a
date to be specified by the parties (the "Closing Date"), which date shall be
no later than the second business day after satisfaction of the conditions set
forth in Article 7, at the offices of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another time, date or place is agreed
to in writing by the parties hereto.
(c) Upon the Closing, Stone and Sub will file a certificate of
merger with the Secretary of State of the State of Delaware and make all other
filings or recordings required by the DGCL in connection with the Merger. The
Merger shall become effective at such time as the certificate of merger is duly
filed with the Secretary of State of the State of Delaware or at such later
time as is agreed by JSC and Stone and specified in the certificate of merger
(the "Effective Time").
(d) The Merger shall have the effects set forth in Section 259 of
the Delaware Law.
Section 1.2. Certificate of Incorporation and Bylaws of the
Surviving Corporation. Prior to the Effective Time, the certificate of
incorporation of Stone as in effect immediately prior to the Effective Time
shall be amended as described in Exhibit D-1. At the Effective Time, the
certificate of incorporation of Stone shall be amended as described in Exhibit
D-2 and such certificate of incorporation, as so amended, shall be the
certificate of incorporation of the Surviving Corporation, and the bylaws of
Sub as in effect immediately prior to the Effective Time shall be the bylaws
of the Surviving Corporation.
Section 1.3. Directors and Officers of the Surviving
Corporation. The directors of Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the certificate of incorporation and bylaws of the
Surviving Corporation, and the officers of Stone immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, in
each case until their respective successors are duly elected or appointed.
Section 1.4. Boards, Committees and Officers of JSC. (a) The
certificate of incorporation of JSC, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time as described in
Exhibit E-1 and, as so amended, such certificate of incorporation shall be the
certificate of incorporation of JSC until thereafter changed or amended as
provided therein or by applicable law.
(b) The bylaws of JSC, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time as described in
Exhibit E-2 and, as so amended, such bylaws shall be the bylaws of JSC until
thereafter changed or amended as provided therein or by applicable law.
(c) From and after the Effective Time, certain governance matters
will be as set forth in Exhibit E-2.
ARTICLE 2
Conversion of Securities
Section 2.1. Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any securities of Stone Common Stock or Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one duly authorized,
validly issued, fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and JSC-Owned Stock. Each share
of common stock, par value $0.01 per share, of Stone ("Stone Common Stock"),
together with any associated Right (as hereinafter defined), that is owned by
Stone as treasury stock and each share of Stone Common Stock that is owned by
JSC or any of its wholly owned Subsidiaries shall be canceled and retired and
shall cease to exist, and no shares of JSC capital stock or other
consideration shall be delivered in exchange therefor. For purposes of this
Agreement other than Section 5.01, "Subsidiary" means, with respect to any
Person, any corporation or other organization, whether incorporated or
unincorporated, of which directly or indirectly at least 50% of the securities
or other interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such Person or by any one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries. Solely for purposes of
Section 5.01, "Subsidiary" means, with respect to any Person, any corporation
or other organization, whether incorporated or unincorporated, of which
directly or indirectly at least a majority of the securities or other
interests having by their terms, subject to contractual or shareholder
agreements existing as of the date hereof, ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such Person or by any one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries. Solely for purposes of
the representations and warranties made by Stone in this Agreement,
Abitibi-Consolidated Inc. and S&G Packaging Company, L.L.C. each will be deemed
a Subsidiary of Stone but Stone's representations and warranties insofar as
they relate to Abitibi-Consolidated Inc. and S&G Packaging Company, L.L.C. will
be deemed to speak only as of the date hereof regardless of whether they are
so limited. For purposes of this Agreement, "Person" means an individual, a
corporation, a limited liability company, a partnership, an association, a
trust or any other entity or organization, including a Governmental Authority
(as hereinafter defined).
(c) Conversion of Stone Common Stock. Subject to Section 2.02,
each issued and outstanding share of Stone Common Stock, together with any
associated Right (other than shares to be canceled pursuant to Section 2.01(b)
or fractional shares for which cash will be paid pursuant to Section 2.02(e)),
shall be converted into .99 shares (as adjusted pursuant to Section 2.01(e),
the "Exchange Ratio") of a duly authorized, validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of JSC ("JSC
Common Stock"). All such shares of Stone Common Stock, when so converted,
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any
such shares shall cease to have any rights with respect thereto, except the
right to receive (i) certificates representing the number of whole shares of
JSC Common Stock into which such shares have been converted, (ii) certain
dividends and other distributions in accordance with Section 2.02(c) and (iii)
cash in lieu of fractional shares of JSC Common Stock in accordance with
Section 2.02(e).
(d) Adjustment of Stone Preferred Stock. At the Effective Time,
each issued and outstanding share of Series E Cumulative Convertible
Exchangeable Preferred Stock, par value $0.01 per share, of Stone ("Stone
Series E Preferred Stock") shall be convertible pursuant to its terms into the
number of shares of JSC Common Stock that its holder would have received in the
Merger had such holder converted such share of Stone Series E Preferred Stock
immediately prior to the Effective Time.
(e) Adjustment to Exchange Ratio. If, prior to the Effective Time,
JSC shall declare a stock dividend or other similar distribution of shares of
JSC Common Stock or securities convertible into shares of JSC Common Stock, or
effect a stock split, reclassification, recapitalization, stock combination or
other change with respect to the JSC Common Stock, the Exchange Ratio shall be
appropriately adjusted to reflect such dividend, distribution, stock split,
reclassification, recapitalization, stock combination or other change.
Notwithstanding anything herein to the contrary, the Exchange Ratio shall not
be adjusted as a result of the Pulp Co. Transaction (as defined and described
in Section 5.01 of the Stone Disclosure Schedule).
Section 2.2. Exchange of Certificates. The procedures for
exchanging outstanding shares of Stone Common Stock for JSC Common Stock
pursuant to the Merger shall be as follows:
(a) Exchange Agent. Prior to or at the Effective Time, JSC shall
deposit with an exchange agent as may be designated by JSC and reasonably
acceptable to Stone (the "Exchange Agent"), for the benefit of the holders of
shares of Stone Common Stock, for exchange in accordance with this Section
2.02, certificates representing the shares of JSC Common Stock issuable
pursuant to Section 2.01 in exchange for outstanding shares of Stone Common
Stock and shall from time to time deposit cash in an amount required to be
paid pursuant to subsections (c) and (e) of this Section 2.02 (such shares of
JSC Common Stock and cash being hereinafter referred to as the "Exchange
Fund").
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Stone Common Stock (each a "Certificate"
and, collectively, the "Certificates") whose shares were converted into shares
of JSC Common Stock pursuant to Section 2.01, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates
to the Exchange Agent and shall be in such form and have such other provisions
as JSC and Stone may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of JSC Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor (x) a certificate or certificates representing that whole
number of shares of JSC Common Stock which such holder has the right to
receive pursuant to the provisions of this Article 2 in such denominations and
registered in such names as such holder may request and (y) a check
representing the amount of cash in lieu of fractional shares, if any, which
such holder has the right to receive pursuant to the provisions of this
Article 2, after giving effect to any required withholding tax. In the event
of a transfer of ownership of shares of Stone Common Stock which is not
registered on the transfer records of Stone, a certificate representing the
proper number of shares of JSC Common Stock, together with a check for the
cash to be paid in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, may be issued to such transferee if the Certificate
representing such shares of Stone Common Stock held by such transferee is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) Distributions with Respect to Unexchanged Shares.
Notwithstanding any other provisions of this Agreement, no dividends or other
distributions declared or made after the Effective Time with respect to any
shares of JSC Common Stock having a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate, and no cash payment in
lieu of fractional shares shall be paid to any such holder, until the holder
of such Certificate shall surrender such Certificate as provided in this
Section 2.02. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the holder of the certificates
representing whole shares of JSC Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of JSC Common Stock to which such holder
is entitled pursuant to subsection (e) of this Section 2.02 and the amount of
dividends or other distributions with a record date after the Effective Time
previously paid with respect to such whole shares of JSC Common Stock, less
the amount of any withholding taxes which may be required thereon, and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole shares
of JSC Common Stock, less the amount of any withholding taxes which may be
required thereon.
(d) No Further Ownership Rights in Stone Common Stock. All shares
of JSC Common Stock issued upon the surrender for exchange of shares of Stone
Common Stock in accordance with the terms hereof (including any cash paid
pursuant to this Article 2) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Stone Common Stock,
subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by Stone on such shares of
Stone Common Stock on or prior to the date hereof and which remain unpaid at
the Effective Time, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of Stone
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided
in this Section 2.02.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of JSC Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to exercise any rights of a stockholder of JSC.
Notwithstanding any other provision of this Agreement, each holder of shares
of Stone Common Stock exchanged pursuant to the Merger who would otherwise
have been entitled to receive a fraction of a share of JSC Common Stock (after
taking into account all Certificates delivered by such holder) shall receive,
in lieu thereof, cash (without interest) in an amount equal to such fractional
part of a share of JSC Common Stock multiplied by the last reported sale price
of JSC Common Stock, as reported on The New York Stock Exchange (the "NYSE")
Composite Tape or The Nasdaq National Market (the "Nasdaq"), as the case may
be, on the last full trading day immediately preceding the Closing Date.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the stockholders of Stone for one year
after the Effective Time shall be delivered to JSC, and any stockholders of
Stone who have not previously complied with this Section 2.02 shall thereafter
look only to JSC for payment of their claim for shares of JSC Common Stock,
any cash in lieu of fractional shares of JSC Common Stock and any dividends
or distributions with respect to JSC Common Stock.
(g) No Liability. Neither JSC nor the Surviving Corporation shall
be liable to any holder of shares of Stone Common Stock or JSC Common Stock,
as the case may be, for such shares (or dividends or distributions with respect
thereto) of JSC Common Stock or cash from the Exchange Fund delivered to a
public official as required by any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to
seven years after the Effective Time (or immediately prior to such earlier
date on which any shares of JSC Common Stock, any dividends or distributions
with respect thereto, or any cash in lieu of fractional shares in respect of
such Certificate would otherwise escheat to or become the property of any
Governmental Authority), any such shares, dividends or distributions or cash
in respect of such Certificate shall, to the extent permitted by applicable
laws, become the property of JSC, free and clear of all claims or interest of
any Person previously entitled thereto.
(h) Missing Certificates. In the event any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact
and the providing of an appropriate indemnity or surety bond by the Person
claiming such Certificate to be lost, stolen or destroyed, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
shares of JSC Common Stock, dividends and distributions and cash in lieu of
fractional shares deliverable in respect thereof pursuant to this Agreement.
ARTICLE 3
Representations and Warranties of Stone
Stone represents and warrants to JSC and Sub that the statements
contained in this Article 3 are true and correct, except as set forth in the
disclosure schedule delivered by Stone to JSC prior to execution of this
Agreement (the "Stone Disclosure Schedule") or in the Stone SEC Reports (as
hereinafter defined) filed prior to the date of this Agreement or as otherwise
expressly contemplated by this Agreement, the Registration Rights Agreement,
the JSC Voting Agreements, the Stone Voting Agreement, the Stock Purchase
Agreement (the "Stock Purchase Agreement") dated as of the date hereof among
Jefferson Smurfit Group plc ("JSG"), SIBV, MSLEF, JSC and certain other JSC
stockholders or the Voting Agreement dated as of the date hereof among SIBV,
MSLEF and Mr. ▇▇▇▇▇ ▇▇▇▇▇ (collectively, the "Transaction Agreements"). For
purposes of this Agreement, "Stone Material Adverse Effect" means a material
adverse effect (i) on the business, properties, assets, liabilities
(contingent or otherwise) or financial condition of Stone and its
Subsidiaries, taken as a whole, or (ii) on the ability of Stone to perform its
obligations under or to consummate the transactions contemplated by this
Agreement, other than effects caused by (x) changes resulting from the
announcement of this Agreement and the proposed consummation of the Merger and
the other transactions contemplated by this Agreement or (y) changes resulting
from conditions affecting the containerboard or newsprint industries generally.
Section 3.1. Organization and Power. Each of Stone and its
Subsidiaries is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and has the requisite corporate or other power
and authority and governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where
the failure to be in good standing or have such power, authority or approvals
would not, individually or in the aggregate, be reasonably expected to have a
Stone Material Adverse Effect. Each of Stone and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, individually or in the aggregate, be reasonably
expected to have a Stone Material Adverse Effect.
Section 3.2. Corporate Authorization. The execution and
delivery by Stone of this Agreement, and the consummation by Stone of the
transactions contemplated hereby, are within Stone's corporate powers and,
except as set forth in the next succeeding sentence of this Section 3.02, have
been duly authorized by all necessary corporate action. The affirmative vote
of two-thirds of the outstanding shares of Stone Common Stock is the only vote
of any class or series of Stone's capital stock necessary to approve and adopt
this Agreement and the transactions contemplated by this Agreement (other than
the amendment to the Stone certificate of incorporation), and the affirmative
vote of a majority of the outstanding shares of Stone Common Stock is the only
vote of any class or series of Stone capital stock necessary to approve the
amendments to the Stone certificate of incorporation contemplated by Section
1.02 hereof. This Agreement has been duly executed and delivered by Stone
and, subject to the receipt of the approval described in the immediately
preceding sentence in the case of this Agreement, constitutes a legal, valid
and binding agreement of Stone, enforceable against Stone in accordance with
its terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, regardless of whether in a proceeding at equity or at law).
Section 3.3. Governmental Authorization. The execution and
delivery by Stone of this Agreement, and the consummation by Stone of the
transactions contemplated hereby, require no action by or in respect of, or
filing with, any federal, state or local government or any court,
administrative agency or commission or other governmental agency or authority,
whether domestic or foreign (a "Governmental Authority"), other than (i) the
filing of a certificate of merger with respect to the Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which Stone is qualified to do business; (ii) the filing of a
certificate of amendment to the Stone certificate of incorporation with
respect to the amendments contemplated by Section 1.02, (iii) compliance with
any applicable requirements of (x) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder
(the "HSR Act"), (y) laws, rules and regulations analogous to the HSR Act
existing in foreign jurisdictions, including but not limited to the European
Union and Canada and (z) the Investment Canada Act; (iv) compliance with any
applicable requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities Act"); (v)
compliance with any applicable requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act"); (vi) compliance with any other applicable securities laws;
(vii) compliance with any environmental, health or safety law or regulation
requiring any notification, disclosure or approval in connection with the
Merger; (viii) actions or filings which, if not taken or made, would not,
individually or in the aggregate, be reasonably expected to have a Stone
Material Adverse Effect; and (ix) filings and notices not required to be made
or given until after the Effective Time.
Section 3.4. Non-Contravention. The execution and delivery of
this Agreement by Stone does not, and the consummation of the transactions
contemplated hereby will not, (i) conflict with, or result in any violation or
breach of any provision of the certificate of incorporation or bylaws of Stone,
(ii) result in any violation or breach of, or constitute (with or without
notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which Stone or any of its Subsidiaries is a party
or by which any of them or any of their properties or assets may be bound, or
(iii) subject to the consents, approvals, orders, authorizations, filings and
registrations contemplated by Section 3.03, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Stone or any of
its Subsidiaries or any of their respective properties or assets, except in
the case of clause (ii) for any such violations, breaches, defaults,
terminations, cancellations or accelerations which would not, individually or
in the aggregate, be reasonably expected to have a Stone Material Adverse
Effect.
Section 3.5. Capitalization. (a) The authorized capital stock
of Stone consists of 200,000,000 shares of Stone Common Stock and 10,000,000
shares of Preferred Stock, par value $0.01 per share ("Stone Preferred
Stock"), of which 2,000,000 shares have been designated Series D Junior
Participating Preferred Stock ("Stone Series D Preferred Stock") and 4,600,000
shares have been designated Stone Series E Preferred Stock. As of April 27,
1998, (i) 99,717,665 shares of Stone Common Stock were issued and outstanding,
(ii) 134,529 shares of Stone Common Stock were held in the treasury of Stone
or by Subsidiaries of Stone, (iii) 4,640,926 shares of Stone Common Stock were
reserved for issuance pursuant to the Stone Employee Plans and the Stone
Benefit Arrangements (as hereinafter defined), (iv) 4,599,300 shares of Stone
Series E Preferred Stock were issued and outstanding, (v) no shares of Stone
Series D Preferred Stock were issued and outstanding, (vi) 2,000,000 shares of
Stone Series D Preferred Stock were reserved for issuance under the Rights
Agreement dated as of July 25, 1988 between Stone and The First National Bank
of Chicago, as amended (the "Rights Agreement"), and (vii) 6,408,122 shares of
Stone Common Stock were reserved for issuance upon the conversion of Stone's
8.875% Convertible Senior Subordinated Notes ("Convertible Notes") and Stone's
6.75% Convertible Subordinated Debentures ("Convertible Debentures"). No
change in such capitalization has occurred since such date except as permitted
and contemplated by Section 5.01(d). All outstanding shares of Stone capital
stock are, and all shares of Stone Common Stock and Stone Preferred Stock
subject to issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be, duly authorized, validly issued, fully paid and nonassessable.
There are no obligations, contingent or otherwise, of Stone or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of Stone
Common Stock or Stone Preferred Stock or the capital stock of any Stone
Subsidiary or make any investment (in the form of a loan, capital contribution
or otherwise) in any such Subsidiary. All of the outstanding shares of
capital stock of, or other equity interests in, each of Stone's Subsidiaries
have been duly authorized and validly issued and are fully paid and
nonassessable and, except for director's qualifying shares, are owned directly
or indirectly by Stone, free and clear of all Liens and free of any other
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such shares or other equity interests). For purposes of this
Agreement, "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
(b) Except as set forth in Section 3.05(a), there are no equity
securities of any class of Stone, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in Section 3.05(a), there are no options,
warrants, securities, calls, rights, commitments or agreements of any character
to which Stone or any of its Subsidiaries is a party or by which any of them
are bound obligating Stone or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of Stone or any of its Subsidiaries or obligating Stone or any of its
Subsidiaries to grant, extend, accelerate the vesting of or enter into any
such option, warrant, equity security, call, right, commitment or agreement.
There are no voting trusts or other agreements or understandings with respect
to the shares of capital stock of Stone to which Stone is a party.
Section 3.6. SEC Filings; Financial Statements. (a) Stone has
filed all required reports, schedules, forms, statements and other documents
with the Securities and Exchange Commission (the "SEC") since December 31,
1994 (the "Stone SEC Reports").
(b) As of its filing date, each Stone SEC Report filed pursuant to
the Exchange Act did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except to the extent that such statements have
been modified or superseded by a later filed Stone SEC Report.
(c) Each Stone SEC Report that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the Securities Act as
of the date such registration statement or amendment became effective did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except to the extent that such statements have been modified or superseded by
a later filed Stone SEC Report.
(d) The consolidated financial statements (including, in each
case, any related notes) contained in the Stone SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited statements, as
permitted for presentation in Quarterly Reports on Form 10-Q), and fairly
presented in all material respects (subject in the case of unaudited
statements to normal, recurring audit adjustments) the consolidated financial
position of Stone and its Subsidiaries as at the respective dates and the
consolidated results of its operations and cash flows for the periods
indicated. The audited balance sheet of Stone as of December 31, 1997 is
referred to herein as the "Stone Balance Sheet".
Section 3.7. No Undisclosed Liabilities. Stone and its
Subsidiaries do not have any liabilities or obligations of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities or obligations which would not, individually or in
the aggregate, be reasonably expected to have a Stone Material Adverse Effect;
(b) liabilities or obligations disclosed or provided for in the
Stone Balance Sheet or in the notes thereto or in the Stone SEC Reports filed
prior to the date hereof;
(c) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated by this Agreement; or
(d) liabilities or obligations incurred since December 31, 1997 in
the ordinary course of business consistent with past practices.
Section 3.8. Litigation. There is no action, suit,
investigation or proceeding pending against, or to the knowledge of Stone,
threatened against or affecting, Stone or any of its Subsidiaries or any of
their respective properties before any Governmental Authority which,
individually or in the aggregate, would be reasonably expected to have a Stone
Material Adverse Effect.
Section 3.9. Absence of Certain Changes or Events. Since the
date of the Stone Balance Sheet, except as contemplated by or as disclosed in
this Agreement, Stone and its Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been (a) any Stone Material Adverse Effect or
any event or development (including in connection with the Merger) that would,
individually or in the aggregate, reasonably be expected to have a Stone
Material Adverse Effect, (b) any event that would, individually or in the
aggregate, reasonably be expected to prevent or materially delay the
performance of this Agreement by Stone, or (c) any action taken by Stone or
any of its Subsidiaries during the period from the date of the Stone Balance
Sheet through the date of this Agreement that, if taken during the period from
the date of this Agreement through the Effective Time, would constitute a
breach of Section 5.01.
Section 3.10. Compliance with Laws; No Default; No
Non-Competes. (a) Neither Stone nor any of its Subsidiaries is in violation
of or has violated or failed to comply with any statute, law, ordinance,
regulation, rule, judgment, decree, order, writ, injunction, permit or license
or other authorization or approval of any Governmental Authority applicable to
its business or operations, except for violations and failures to comply that
would not, individually or in the aggregate, be reasonably expected to result
in a Stone Material Adverse Effect.
(b) Each material agreement, contract or commitment to which Stone
or any of its Subsidiaries is a party and which can reasonably be expected to
require the payment of money in excess of $10,000,000 per annum ("Stone
Material Contracts") is a valid, binding and enforceable obligation of Stone
or such Subsidiary and in full force and effect, except where the failure to be
valid, binding and enforceable and in full force and effect would not,
individually or in the aggregate, be reasonably expected to have a Stone
Material Adverse Effect. None of Stone or any of its Subsidiaries is in
default or violation of any term, condition or provision of (i) its respective
certificate of incorporation or by-laws or similar organizational documents or
(ii) any Stone Material Contract, except in the case of clause (ii) for any
defaults or violations that would not, individually or in the aggregate, be
reasonably expected to have a Stone Material Adverse Effect.
(c) Neither Stone nor any of its Subsidiaries is a party to any
agreement that expressly limits the ability of Stone or such Subsidiary to
compete in or conduct any line of business or compete with any Person or in
any geographic area or during any period of time except to the extent that any
such limitation would not, individually or in the aggregate, be reasonably
expected to have a JSC Material Adverse Effect after giving effect to the
Merger.
Section 3.11. Taxes. (a) Each of Stone and its Subsidiaries
has timely filed (or has had timely filed on its behalf) or will file or cause
to be timely filed, all material Tax Returns required by applicable law to be
filed by it prior to or as of the Effective Time, and all such material Tax
Returns are, or will be at the time of filing, complete in all material
respects.
(b) Each of Stone and its Subsidiaries has paid (or has had paid
on its behalf) or, where payment is not yet due, has established (or has had
established on its behalf and for its sole benefit and recourse) or will
establish or cause to be established in accordance with generally accepted
accounting principles on or before the Effective Time an adequate accrual for
the payment of, all material Taxes due with respect to any period ending prior
to or as of the Effective Time.
(c) The federal income Tax Returns of Stone and its Subsidiaries
have been examined and settled with the Internal Revenue Service (the "IRS")
(or the applicable statutes of limitation for the assessment of federal income
Taxes for such periods have expired) for all years through 1992, except for
the years 1986, 1987 and 1988 which are currently in appeals.
(d) There are no material Tax claims pending against Stone or any
of its Subsidiaries and Stone does not know of any threatened claim for
material Tax deficiencies or any basis for such claims, no material issues
have been raised in writing in any examination by any taxing authority with
respect to Stone or any of its Subsidiaries which, by application of similar
principles, reasonably could be expected to result in a material proposed
deficiency for any other period not so examined, and there is not now in force
any waiver or agreement by Stone or any of its Subsidiaries for the extension
of time for the assessment of any material Tax, nor has any such waiver or
agreement been requested in writing by any taxing authority. Neither Stone
nor any of its Subsidiaries has any liability with respect to any material
United States federal, state, local, foreign or other Taxes of any corporation
or entity other than Stone and its Subsidiaries.
(e) No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code.
(f) Neither Stone nor any of its Subsidiaries, nor any of its other
Affiliates, (i) has taken any action, agreed to take any action, or failed to
take any action, or (ii) has knowledge of any fact or circumstance that
(without regard to any action taken or agreed to be taken by JSC or any of its
Affiliates) could reasonably be expected to cause the Merger to fail to qualify
as a "reorganization" within the meaning of Section 368(a) of the Code.
(g) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added,
capital, net worth, payroll, profits, withholding, franchise, transfer and
recording taxes, fees and charges, and any other taxes, assessment or similar
charges imposed by the IRS or any taxing authority (whether domestic or foreign
including any state, county, local or foreign government or any subdivision or
taxing agency thereof (including a United States possession)) (a "Taxing
Authority"), whether computed on a separate, consolidated, unitary, combined
or any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies or other
assessments. "Tax Return" shall mean any report, return, document,
declaration or other information or filing required to be supplied to any
taxing authority or jurisdiction (foreign or domestic) with respect to Taxes,
including information returns, any documents with respect to or accompanying
payments of estimated Taxes, or with respect to or accompanying requests for
the extension of time in which to file any such report, return, document,
declaration or other information.
Section 3.12. Intellectual Property. (a) Stone and its
Subsidiaries own, or are licensed or otherwise possess legally enforceable
rights and are otherwise legally entitled to use, all patents, trade secrets,
trademarks, trade names, service marks, copyrights and mask works, all
applications for and registrations of such patents, trademarks, trade names,
service marks, copyrights and mask works, and all processes, formulae,
methods, schematics, technology, know-how, computer software programs or
applications and tangible or intangible proprietary information or material
that are necessary to conduct the business of Stone and its Subsidiaries as
currently conducted (the "Stone Intellectual Property Rights") except to the
extent that the failure to have such rights would not, individually or in the
aggregate, be reasonably expected to have a Stone Material Adverse Effect.
(b) Neither Stone nor any of its Subsidiaries is or will be as a
result of the execution and delivery of this Agreement, or the performance of
its obligations under this Agreement, in breach of any license, sublicense or
other agreement relating to the Stone Intellectual Property Rights or any
license, sublicense or other agreement pursuant to which Stone or any of its
Subsidiaries is authorized to use any third party patents, trademarks or
copyrights, including software, which are used in the manufacture of,
incorporated in, or form a part of any product of Stone or any of its
Subsidiaries, except for breaches which, individually or in the aggregate,
would not be reasonably expected to have a Stone Material Adverse Effect.
(c) All patents, registered and common law trademarks, service
marks and copyrights held by Stone or any of its Subsidiaries which are
material to the business of Stone and its Subsidiaries are valid and
enforceable. Neither Stone nor any of its Subsidiaries (i) has been sued in
any suit, action or proceeding which involves a claim of infringement of any
patent, trade secret, trademark, service ▇▇▇▇ or copyright or the violation of
any trade secret or other proprietary right of any third party or (ii) has any
knowledge that the manufacturing, importation, marketing, licensing, sale,
offer for sale, or use of any of its products infringes any patent, trademark,
service ▇▇▇▇, copyright, trade secret or other proprietary right of any third
party, which infringement, individually or in the aggregate, would be
reasonably expected to have a Stone Material Adverse Effect.
Section 3.13. Environmental Matters. (a) Except as would not,
individually or in the aggregate, reasonably be expected to have a Stone
Material Adverse Effect:
(i) no notice, demand, request for information,
request for an investigation, notice of violation, citations,
summons, claim, complaint or order has been received by, or, to
Stone's knowledge, is pending or threatened by any Person
against, Stone or any of its Subsidiaries nor has any material
penalty been assessed or, to Stone's knowledge, is pending or
threatened against Stone or any of its Subsidiaries with respect
to any matters relating to Stone or any of its Subsidiaries and
relating to or arising out of Environmental Laws;
(ii) no property now or previously owned, leased
or operated by Stone or any of its Subsidiaries nor any property
to which Stone or any of its Subsidiaries has, directly or
indirectly, transported or arranged for the transportation of any
Hazardous Substance is listed or, to Stone's knowledge, proposed
for listing on any federal, state, local or foreign list of sites
requiring investigation or clean-up;
(iii) to Stone's knowledge, no Hazardous
Substance has been discharged, emitted, released or is present at
any property now or previously owned, leased or operated by Stone
or any of its Subsidiaries in a manner that violated, or that is
required to be investigated, remediated or removed pursuant to,
Environmental Laws;
(iv) there are no liabilities of or relating to
Stone or any of its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, arising under or relating to Environmental Laws; and
(v) Stone and its Subsidiaries have or have
applied for all permits or licenses necessary to operate their
facilities in material compliance with Environmental Laws and are
currently in material compliance with Environmental Laws.
(b) For purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "Environmental Laws" means any applicable
federal, state, local and foreign statutes, laws, judicial decisions,
regulations, rules, codes, injunctions, permits, licenses, approvals,
agreements or governmental restrictions, each as in effect on or
prior to the Closing Date, relating to protection of the environment
or human health and safety or to the manufacture, use, treatment,
storage, disposal or handling of, or to emissions, discharges or
releases of, pollutants, contaminants, wastes or other hazardous
substances into the environment.
(ii) "Hazardous Substance" means any pollutant,
contaminant, waste or chemical or any toxic, radioactive, ignitable,
corrosive or otherwise hazardous substance, waste, or material,
including without limitation petroleum, its derivatives, by-products
and other hydrocarbons, which in any event is regulated under
Environmental Laws.
Section 3.14. Employee Benefits and Labor Matters. (a) The
Stone Disclosure Schedule contains a list identifying each "employee benefit
plan" (as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974 ("ERISA")), which is subject to any provision of ERISA and is
maintained, administered or contributed to by Stone or any of its Affiliates
and covers any employee or former employee of Stone or any of its Subsidiaries
or under which Stone or any of its Subsidiaries has any liability. Copies of
such plans (and, if applicable, related trust agreements) and all amendments
thereto have been made available to JSC together with the most recent annual
report (Form 5500 including, if applicable, Schedule B thereto) prepared in
connection with any such plan and the three most recent actuarial valuation
reports prepared in connection with any such plan. Such plans are referred to
collectively herein as the "Stone Employee Plans". The only Stone Employee
Plans which individually or collectively would constitute an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) are identified as such in
the list referred to above.
(b) No "accumulated funding deficiency" (as defined in Section 412
of the Code) has been incurred with respect to any Stone Employee Plan subject
to Title IV of ERISA, whether or not waived. No "reportable event" (within
the meaning of Section 4043 of ERISA) and no event described in Section 4041,
4042, 4062 or 4063 of ERISA has occurred in connection with any Stone Employee
Plans other than any reportable event which would not, individually or in the
aggregate, be reasonably expected to have a Stone Material Adverse Effect. No
condition exists and no event has occurred that could constitute grounds for
termination of any Stone Employee Plans other than any such terminations that
would not, individually or in the aggregate, be reasonably expected to have a
Stone Material Adverse Effect. Neither Stone nor any Stone ERISA Affiliate
has any material unsatisfied liability under Title IV of ERISA in connection
with the termination of, or complete or partial withdrawal from, any plan
covered or previously covered by Title IV of ERISA. Nothing done or omitted
to be done and no transaction or holding of any asset under or in connection
with any Stone Employee Plan has or will make Stone or any of its Subsidiaries
or any officer or director of Stone or any of its Subsidiaries subject to any
liability under Title I of ERISA or liable for any tax pursuant to Section
4975 of the Code that would, individually or in the aggregate, be reasonably
expected to have a Stone Material Adverse Effect. For purposes of this
Section, "Stone ERISA Affiliate" means any other Person which, together with
Stone, would be treated as a single employer under Section 414 of the Code.
(c) Each Stone Employee Plan that is intended to be qualified under
Section 401(a) of the Code has received a determination letter from the IRS
that it is so qualified and, to the knowledge of Stone, is so qualified and has
been so qualified during the period since its adoption. To the knowledge of
Stone, each trust created under any such Stone Employee Plan is exempt from
tax under Section 501(a) of the Code and, to the knowledge of Stone, has been
so exempt since its creation. Stone has made available to JSC the most recent
determination letter of the IRS relating to each such Stone Employee Plan.
Each Stone Employee Plan has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations, including, but not limited to, ERISA and the Code,
which are applicable to such Stone Employee Plan, excluding any instances of
non-compliance that would not, individually or in the aggregate, be reasonably
expected to have a Stone Material Adverse Effect.
(d) The Stone Disclosure Schedule contains a list of each material
employment, severance or other similar contract, arrangement or policy and
each plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which is not a Stone Employee Plan, is
entered into, maintained or contributed to, as the case may be, by Stone or any
of its Affiliates and covers any employee or former employee of Stone or any
of its Subsidiaries. Such contracts, plans and arrangements as are described
above, copies or descriptions of all of which have been furnished previously to
JSC, are referred to collectively herein as the "Stone Benefit Arrangements".
Each Stone Benefit Arrangement has been maintained in substantial compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations that are applicable to such Stone Benefit
Arrangement, excluding any instances of non-compliance that would not,
individually or in the aggregate, be reasonably expected to have a Stone
Material Adverse Effect.
(e) No Stone Employee Plan, Stone Benefit Arrangement or related
document contains any provision that would prevent Stone or any of its
Subsidiaries from amending or terminating any post-retirement health, medical
or life insurance benefits and, to the knowledge of Stone, no agent or
representative of Stone or any of its Affiliates has made any statements that
would limit the ability of Stone or any of its Subsidiaries to amend or
terminate any such benefits.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by Stone or any of its Affiliates
relating to, or change in employee participation or coverage under, any Stone
Employee Plans or Stone Benefit Arrangement which would increase materially
the expense of maintaining such Stone Employee Plans or Stone Benefit
Arrangement above the level of the expense incurred in respect thereof for the
fiscal year ended on the closing date of the Stone Balance Sheet.
(g) The execution of, and the performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any Stone
Employee Plan, Stone Benefit Arrangement, trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current or former employee,
director or consultant of Stone or any of its Subsidiaries, or result in the
triggering or imposition of any restrictions or limitations on the right of
JSC, Stone or any of its Subsidiaries to amend or terminate any Stone Employee
Plans and receive the full amount of any excess assets remaining or resulting
from such amendment or termination, subject to applicable taxes. There is no
contract, agreement, plan or arrangement covering any employee or former
employee of Stone or any of its Subsidiaries that, individually or in the
aggregate, could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Sections 162(a)(1), 162(i)(2) or 280G of
the Code.
(h) No work stoppage, labor strike or slowdown against Stone or any
of its Subsidiaries is pending or threatened. Neither Stone nor any of its
Subsidiaries is involved in or threatened with any labor dispute or grievance
which, individually or in the aggregate, has had or would be reasonably
expected to have a Stone Material Adverse Effect. To the knowledge of Stone
there is no organizing effort or representation question at issue with respect
to any employee of Stone or any of its Subsidiaries. No collective bargaining
agreement to which Stone or any of its Subsidiaries is or may be a party is
currently under negotiation or renegotiation and no existing collective
bargaining agreement is due for expiration, renewal or renegotiation within the
one year period after the date hereof.
Section 3.15. Transactions with Affiliates. Since the date of
Stone's last proxy statement prior to the date of this Agreement, there have
been no transactions, agreements, arrangements or understandings between Stone
or its Subsidiaries, on the one hand, and Stone's Affiliates (other than
wholly-owned Subsidiaries of Stone) or other Persons, on the other hand, that
would be required to be disclosed under Item 404 of Regulation S-K under the
Securities Act. For purposes of this Agreement, "Affiliate", when used with
respect to any Person, means any other Person directly or indirectly
controlling, controlled by, or under common control with such Person. As used
in the definition of "Affiliate", the term "control" means possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Section 3.16. Information Supplied. The information supplied by
Stone for inclusion in the registration statement on Form S-4 or any amendment
or supplement thereto pursuant to which shares of JSC Common Stock issuable in
the Merger will be registered with the SEC (the "Registration Statement") shall
not at the time the Registration Statement is declared effective by the SEC
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The information supplied by Stone for inclusion in the joint proxy
statement/prospectus or any amendment or supplement thereto (the "Proxy
Statement") to be sent to the stockholders of Stone in connection with their
meeting to consider this Agreement and the Merger and the amendments to the
Stone certificate of incorporation contemplated by Section 1.02 hereof (the
"Stone Stockholders' Meeting") and to the stockholders of JSC in connection with
their meeting to consider the issuance of shares of JSC Common Stock in the
Merger and the amendments to the JSC certificate of incorporation contemplated
by Section 1.04(a) hereof (the "JSC Stockholders' Meeting" and together with the
Stone Stockholders' Meeting, the "Stockholders' Meetings") shall not, on the
date the Proxy Statement is first mailed to the stockholders of Stone and JSC or
at the time of the Stockholders' Meetings, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 3.17. Opinion of Financial Advisor. The financial
advisor of ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, has delivered to Stone a written
opinion dated the date of this Agreement to the effect that the Exchange Ratio
is fair from a financial point of view to the common stockholders of Stone.
Stone has delivered to JSC a copy of such opinion.
Section 3.18. Finders' Fees. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
a copy of whose engagement agreement has been provided to JSC, no investment
banker, broker, finder, other intermediary or other Person is entitled to any
investment banking, broker's, finder's or similar fee or commission from Stone
or any of its Subsidiaries upon consummation of the transactions contemplated
by this Agreement.
Section 3.19. Takeover Statutes. The Board of Directors of
Stone has approved the Merger and this Agreement, and such approval is
sufficient to render inapplicable to the Merger, this Agreement and the
transactions contemplated by this Agreement the provisions of Section 203 of
the DGCL. To the best of Stone's knowledge, no other "fair price",
"moratorium", "control share acquisition" or other similar antitakeover
statute or regulation enacted under state or federal laws in the United States
(each, a "Takeover Statute") applicable to Stone or any of its Subsidiaries is
applicable to the Merger or the other transactions contemplated hereby.
Section 3.20. Rights Agreement. Stone has amended the Rights
Agreement to (i) extend its final maturity date to December 31, 1998, (ii)
render the Rights Agreement inapplicable to the Merger and the other
transactions contemplated by this Agreement and (iii) provide that JSC shall
not be deemed an Acquiring Person (as defined in the Rights Agreement), the
Distribution Date (as defined in the Rights Agreement) shall not be deemed to
occur and the rights issuable pursuant to the Rights Agreement (the "Rights")
will not separate from the shares of Stone Common Stock, as a result of
entering into this Agreement or consummating the Merger and the other
transactions contemplated hereby, and, except as otherwise provided herein,
such amended Rights Agreement may not be further amended by Stone without the
prior written consent of JSC in its sole discretion.
Section 3.21. Non-Recourse Debt and Obligations. Stone has no
guarantees, keep-well arrangements nor any liabilities with respect to the
indebtedness of the Stone entities listed in Section 3.21 of the Stone
Disclosure Schedule, and, except as provided therein, has no continuing
financial or commercial obligations to such entities, including with respect
to the support or funding of such entities.
ARTICLE 4
Representations and Warranties of JSC and Sub
JSC and Sub represent and warrant to Stone that the statements
contained in this Article 4 are true and correct, except as set forth in the
disclosure schedule delivered by JSC to Stone prior to the execution of this
Agreement (the "JSC Disclosure Schedule") or in the JSC SEC Reports (as
hereinafter defined) filed prior to the date of this Agreement or as otherwise
expressly contemplated by the Transaction Agreements. For purposes of this
Agreement, "JSC Material Adverse Effect" means a material adverse effect (i)
on the business, properties, assets, liabilities (contingent or otherwise) or
financial condition of JSC and its Subsidiaries, taken as a whole, or (ii) on
the ability of JSC or Sub to perform their respective obligations under or to
consummate the transactions contemplated by this Agreement, other than effects
caused by (x) changes resulting from the announcement of this Agreement and
the proposed consummation of the Merger and the other transactions
contemplated by this Agreement or (y) changes resulting from conditions
affecting the containerboard or newsprint industries generally.
Section 4.1. Organization and Power. Each of JSC and its
Subsidiaries is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and has the requisite corporate or other power
and authority and governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where
the failure to be in good standing or have such power, authority or approvals
would not, individually or in the aggregate, be reasonably expected to have a
JSC Material Adverse Effect. Each of JSC and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, individually or in the aggregate, be reasonably
expected to have a JSC Material Adverse Effect.
Section 4.2. Corporate Authorization. The execution and
delivery by JSC and Sub of this Agreement and by JSC of the Registration Rights
Agreement dated the date hereof among JSC, SIBV, MSLEF and certain other JSC
stockholders (the "Registration Rights Agreement") in substantially the form
attached hereto as Exhibit F, and the consummation by JSC and Sub of the
transactions contemplated hereby and thereby, are within the corporate powers
of JSC and Sub and, except as set forth in the next succeeding sentence, have
been duly authorized by all necessary corporate action. The affirmative vote
of one-half of the outstanding shares of JSC Common Stock present in person or
by proxy at the JSC Stockholders' Meeting is the only vote of any class or
series of JSC capital stock necessary to approve the issuance of JSC Common
Stock in the Merger, and the affirmative vote of two-thirds of the outstanding
shares of JSC Common Stock is the only vote of any class or series of JSC
capital stock necessary to effect the amendments to the JSC certificate of
incorporation contemplated by Section 1.04(a) hereof. This Agreement has been
duly executed and delivered by JSC and Sub and, subject to the receipt of the
approval described in the immediately preceding sentence, constitutes a legal,
valid and binding agreement of JSC and Sub, enforceable against JSC and Sub in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws
affecting creditors' rights generally from time to time in effect and to
general principles of equity, regardless of whether in a proceeding at equity
or at law). The Registration Rights Agreement has been duly executed and
delivered by JSC and constitutes a legal, valid and binding agreement of JSC,
enforceable against JSC in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, regardless of whether in a
proceeding at equity or at law). The shares of JSC Common Stock issued
pursuant to the Merger, when issued in accordance with the terms hereof, will
be duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights.
Section 4.3. Governmental Authorization. The execution and
delivery by JSC and Sub of this Agreement and by JSC of the Registration
Rights Agreement, and the consummation by JSC and Sub of the transactions
contemplated hereby and thereby, require no action by or in respect of, or
filing with, any Governmental Authority other than (i) the filing of a
certificate of merger with respect to the Merger with the Delaware Secretary
of State and appropriate documents with the relevant authorities of other
states in which JSC is qualified to do business; (ii) the filing of an amended
and restated certificate of incorporation of JSC with respect to the amendments
contemplated by Section 1.04(a) hereof; (iii) compliance with any applicable
requirements of (x) the HSR Act, (y) laws, rules and regulations analogous to
the HSR Act existing in foreign jurisdictions, including but not limited to the
European Union and Canada and (z) the Investment Canada Act; (iv) compliance
with any applicable requirements of the Securities Act; (v) compliance with
any applicable requirements of the Exchange Act; (vi) compliance with any
other applicable securities laws; (vii) compliance with any environmental,
health or safety law or regulation requiring any notification, disclosure or
approval in connection with the Merger; (viii) actions or filings which, if
not taken or made, would not, individually or in the aggregate, be reasonably
expected to have a JSC Material Adverse Effect; and (ix) filings and notices
not required to be made or given until after the Effective Time.
Section 4.4. Non-Contravention. The execution and delivery of
this Agreement by JSC and Sub, and the execution and delivery of the
Registration Rights Agreement by JSC, does not, and the consummation of the
transactions contemplated hereby and thereby will not, (i) conflict with, or
result in any violation or breach of any provision of the certificate of
incorporation or bylaws of JSC or Sub, (ii) result in any violation or breach
of, or constitute (with or without notice or lapse of time, or both) a default
(or give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which JSC or any of its Subsidiaries is
a party or by which any of them or any of their properties or assets may be
bound, or (iii) subject to the consents, approvals, orders, authorizations,
filings and registrations contemplated by Sections 4.02 and 4.03, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to JSC
or any of its Subsidiaries or any of their respective properties or assets,
except in the case of clause (ii) for any such violations, breaches, defaults,
terminations, cancellations or accelerations which would not, individually or
in the aggregate, be reasonably expected to have a JSC Material Adverse Effect.
Section 4.5. Capitalization. (a) The authorized capital stock
of JSC consists of 250,000,000 shares of JSC Common Stock and 50,000,000 shares
of Preferred Stock, par value $0.01 per share ("JSC Preferred Stock"). As of
April 30, 1998, (i) 110,997,184 shares of JSC Common Stock were issued and
outstanding, (ii) no shares of JSC Common Stock were held in the treasury of
JSC or by Subsidiaries of JSC, (iii) 8,353,848 shares of JSC Common Stock were
reserved for issuance pursuant to the JSC Employee Plans and the JSC Benefit
Arrangements and (iv) no shares of JSC Preferred Stock were issued and
outstanding. No change in such capitalization has occurred since such date
except as permitted or contemplated by Section 5.02(d). All outstanding
shares of JSC capital stock are, and all shares of JSC Common Stock subject to
issuance as specified above, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, shall be,
duly authorized, validly issued, fully paid and nonassessable. There are no
obligations, contingent or otherwise, of JSC or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of JSC Common Stock or JSC
Preferred Stock or the capital stock of any JSC Subsidiary or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such Subsidiary. All of the outstanding shares of capital stock of, or other
equity interests in, each of JSC's Subsidiaries have been duly authorized and
validly issued and are fully paid and nonassessable and, except for director's
qualifying shares, are owned directly or indirectly by JSC, free and clear of
all Liens and free of any other restriction (including any restriction on the
right to vote, sell or otherwise dispose of such shares or other equity
interests).
(b) Except as set forth in Section 4.05(a), there are no equity
securities of any class of JSC, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in Section 4.05(a) and as contemplated by
this Agreement, there are no options, warrants, securities, calls, rights,
commitments or agreements of any character to which JSC or any of its
Subsidiaries is a party or by which any of them are bound obligating JSC or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of JSC or any of its
Subsidiaries or obligating JSC or any of its Subsidiaries to grant, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. There are no voting trusts or
other agreements or understandings with respect to the shares of capital stock
of JSC to which JSC is a party.
(c) The authorized capital stock of Sub consists solely of
400,000,000 shares of common stock, par value $0.01 per share ("Sub Common
Stock"), of which, as of the date hereof, 110,000,000 shares were issued and
outstanding and none were reserved for issuance. As of the date hereof, all of
the outstanding shares of Sub Common Stock are owned by JSC free and clear of
all Liens.
Section 4.6. SEC Filings; Financial Statements. (a) JSC has
filed all required reports, schedules, forms, statements and other documents
with the SEC since December 31, 1994 (the "JSC SEC Reports").
(b) As of its filing date, each JSC SEC Report filed pursuant to
the Exchange Act did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except to the extent that such statements have
been modified or superseded by a later filed JSC SEC Report.
(c) Each JSC SEC Report that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the Securities Act
as of the date such registration statement or amendment became effective did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except to the extent that such statements have been
modified or superseded by a later filed JSC SEC Report.
(d) The consolidated financial statements (including, in each
case, any related notes) contained in the JSC SEC Reports complied as to form
in all material respects with the applicable published rules and regulations
of the SEC with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted for
presentation in Quarterly Reports on Form 10-Q), and fairly presented in all
material respects (subject in the case of unaudited statements to normal,
recurring audit adjustments) the consolidated financial position of JSC and
its Subsidiaries as at the respective dates and the consolidated results of
its operations and cash flows for the periods indicated. The audited balance
sheet of JSC as of December 31, 1997 is referred to herein as the "JSC Balance
Sheet".
Section 4.7. No Undisclosed Liabilities. JSC and its
Subsidiaries do not have any liabilities or obligations of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities or obligations which would not, individually or in
the aggregate, be reasonably expected to have a JSC Material Adverse Effect;
(b) liabilities or obligations disclosed or provided for in the JSC
Balance Sheet or in the notes thereto or in the JSC SEC Reports filed prior to
the date hereof;
(c) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated by this Agreement; or
(d) liabilities or obligations incurred since December 31, 1997 in
the ordinary course of business consistent with past practices.
Section 4.8. Litigation. There is no action, suit,
investigation or proceeding pending against, or to the knowledge of JSC,
threatened against or affecting, JSC or any of its Subsidiaries or any of
their respective properties before any Governmental Authority which,
individually or in the aggregate, would be reasonably expected to have a JSC
Material Adverse Effect.
Section 4.9. Absence of Certain Changes or Events. Since the
date of the JSC Balance Sheet, except as contemplated by or as disclosed in
this Agreement, JSC and its Subsidiaries have conducted their businesses only
in the ordinary course and in a manner consistent with past practice and, since
such date, there has not been (a) any JSC Material Adverse Effect or any event
or development (including in connection with the Merger) that would,
individually or in the aggregate, reasonably be expected to have a JSC
Material Adverse Effect, (b) any event that would, individually or in the
aggregate, reasonably be expected to prevent or materially delay the
performance of this Agreement by JSC, or (c) any action taken by JSC or any
of its Subsidiaries during the period from the date of the JSC Balance Sheet
through the date of this Agreement that, if taken during the period from the
date of this Agreement through the Effective Time, would constitute a breach
of Section 5.02.
Section 4.10. Compliance with Laws; No Default; No
Non-Competes. (a) Neither JSC nor any of its Subsidiaries is in violation of
or has violated or failed to comply with any statute, law, ordinance,
regulation, rule, judgment, decree, order, writ, injunction, permit or license
or other authorization or approval of any Governmental Authority applicable to
its business or operations, except for violations and failures to comply that
would not, individually or in the aggregate, be reasonably expected to result
in a JSC Material Adverse Effect.
(b) Each material agreement, contract or commitment to which JSC
or any of its Subsidiaries is a party and which can reasonably be expected to
require the payment of money in excess of $10,000,000 per annum ("JSC Material
Contracts") is a valid, binding and enforceable obligation of JSC or such
Subsidiary and in full force and effect, except where the failure to be valid,
binding and enforceable and in full force and effect would not, individually
or in the aggregate, be reasonably expected to have a JSC Material Adverse
Effect. None of JSC or any of its Subsidiaries is in default or violation of
any term, condition or provision of (i) its respective certificate of
incorporation or by-laws or similar organizational documents or (ii) any JSC
Material Contract, expect in the case of clause (ii) for any defaults or
violations that would not, individually or in the aggregate, be reasonably
expected to have a JSC Material Adverse Effect.
(c) Neither JSC nor any of its Subsidiaries is a party to any
agreement that expressly limits the ability of JSC or such Subsidiary to
compete in or conduct any line of business or compete with any Person or in
any geographic area or during any period of time except to the extent that any
such limitation would not, individually or in the aggregate, be reasonably
expected to have a JSC Material Adverse Effect after giving effect to the
Merger.
Section 4.11. Taxes. (a) Each of JSC and its Subsidiaries has
timely filed (or has had timely filed on its behalf) or will file or cause to
be timely filed, all material Tax Returns required by applicable law to be
filed by it prior to or as of the Effective Time, and all such material Tax
Returns are, or will be at the time of filing, complete in all material
respects.
(b) Each of JSC and its Subsidiaries has paid (or has had paid on
its behalf) or, where payment is not yet due, has established (or has had
established on its behalf and for its sole benefit and recourse) or will
establish or cause to be established in accordance with generally accepted
accounting principles on or before the Effective Time an adequate accrual for
the payment of, all material Taxes due with respect to any period ending prior
to or as of the Effective Time.
(c) The federal income Tax Returns of JSC and its Subsidiaries have
been examined by and settled with the IRS (or the applicable statutes of
limitation for the assessment of federal income Taxes for such periods have
expired) for all years through 1988.
(d) There are no material Tax claims pending against JSC or any of
its Subsidiaries and JSC does not know of any threatened claim for material
Tax deficiencies or any basis for such claims, no material issues have been
raised in writing in any examination by any taxing authority with respect to
JSC or any of its Subsidiaries which, by application of similar principles,
reasonably could be expected to result in a material proposed deficiency for
any other period not so examined, and there is not now in force any waiver or
agreement by JSC or any of its Subsidiaries for the extension of time for the
assessment of any material Tax, nor has any such waiver or agreement been
requested in writing by any taxing authority. Neither JSC nor any of its
Subsidiaries has any liability with respect to any material United States
federal, state, local, foreign or other Taxes of any corporation or entity
other than JSC and its Subsidiaries.
(e) Neither JSC nor any of its Subsidiaries, nor any of its other
Affiliates, (i) has taken any action, agreed to take any action, or failed to
take any action, or (ii) has knowledge of any fact or circumstance that
(without regard to any action taken or agreed to be taken by Stone or any of
its Affiliates) could reasonably be expected to cause the Merger to fail to
qualify as a "reorganization" within the meaning of Section 368(a) of the
Code.
Section 4.12. Intellectual Property. (a) JSC and its
Subsidiaries own, or are licensed or otherwise possess legally enforceable
rights and are otherwise legally entitled to use, all patents, trade secrets,
trademarks, trade names, service marks, copyrights and mask works, all
applications for and registrations of such patents, trademarks, trade names,
service marks, copyrights and mask works, and all processes, formulae,
methods, schematics, technology, know-how, computer software programs or
applications and tangible or intangible proprietary information or material
that are necessary to conduct the business of JSC and its Subsidiaries as
currently conducted (the "JSC Intellectual Property Rights") except to the
extent that the failure to have such rights would not, individually or in the
aggregate, be reasonably expected to have a JSC Material Adverse Effect.
(b) Neither JSC nor any of its Subsidiaries is or will be as a
result of the execution and delivery of this Agreement, or the performance of
its obligations under this Agreement, in breach of any license, sublicense or
other agreement relating to the JSC Intellectual Property Rights or any
license, sublicense or other agreement pursuant to which JSC or any of its
Subsidiaries is authorized to use any third party patents, trademarks or
copyrights, including software, which are used in the manufacture of,
incorporated in, or form a part of any product of JSC or any of its
Subsidiaries, except for breaches which would not, individually or in the
aggregate, be reasonably expected to have a JSC Material Adverse Effect.
(c) All patents, registered and common law trademarks, service
marks and copyrights held by JSC or any of its Subsidiaries which are material
to the business of JSC and its Subsidiaries are valid and enforceable. Neither
JSC nor any of its Subsidiaries (i) has been sued in any suit, action or
proceeding which involves a claim of infringement of any patent, trade secret,
trademark, service ▇▇▇▇ or copyright or the violation of any trade secret or
other proprietary right of any third party or (ii) has any knowledge that the
manufacturing, importation, marketing, licensing, sale, offer for sale, or use
of any of its products infringes any patent, trademark, service ▇▇▇▇,
copyright, trade secret or other proprietary right of any third party, which
infringement, individually or in the aggregate, would be reasonably expected
to have a JSC Material Adverse Effect.
Section 4.13. Environmental Matters. (a) Except as would not,
individually or in the aggregate, reasonably be expected to have a JSC
Material Adverse Effect:
(i) no notice, demand, request for information,
request for an investigation, notice of violation, citations,
summons, claim, complaint or order has been received by, or, to
JSC's knowledge, is pending or threatened by any Person against,
JSC or any of its Subsidiaries nor has any material penalty been
assessed or, to JSC's knowledge, is pending or threatened against
JSC or any of its Subsidiaries with respect to any matters
relating to JSC or any of its Subsidiaries and relating to or
arising out of Environmental Laws;
(ii) no property now or previously owned, leased
or operated by JSC or any of its Subsidiaries nor any property to
which JSC or any of its Subsidiaries has, directly or indirectly,
transported or arranged for the transportation of any Hazardous
Substance is listed or, to JSC's knowledge, proposed for listing
on any federal, state, local or foreign list of sites requiring
investigation or clean-up;
(iii) to JSC's knowledge, no Hazardous Substance
has been discharged, emitted, released or is present at any
property now or previously owned, leased or operated by JSC or
any of its Subsidiaries in a manner that violated, or that is
required to be investigated, remediated or removed pursuant to,
Environmental Laws;
(iv) there are no liabilities of or relating to
JSC or any of its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, arising under or relating to Environmental Laws; and
(v) JSC and its Subsidiaries have or have
applied for all permits or licenses necessary to operate their
facilities in material compliance with Environmental Laws and are
currently in material compliance with Environmental Laws.
Section 4.14. Employee Benefits and Labor Matters. (a) The JSC
Disclosure Schedule contains a list identifying each "employee benefit plan"
(as defined in Section 3(3) of ERISA), which is subject to any provision of
ERISA and is maintained, administered or contributed to by JSC or any of its
Affiliates and covers any employee or former employee of JSC or any of its
Subsidiaries or under which JSC or any of its Subsidiaries has any liability.
Copies of such plans (and, if applicable, related trust agreements) and all
amendments thereto have been made available to JSC together with the most
recent annual report (Form 5500 including, if applicable, Schedule B thereto)
prepared in connection with any such plan and the three most recent actuarial
valuation reports prepared in connection with any such plan. Such plans are
referred to collectively herein as the "JSC Employee Plans". The only JSC
Employee Plans which individually or collectively would constitute an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) are
identified as such in the list referred to above.
(b) No "accumulated funding deficiency" (as defined in Section 412
of the Code) has been incurred with respect to any JSC Employee Plan subject
to Title IV of ERISA, whether or not waived. No "reportable event" (within
the meaning of Section 4043 of ERISA) and no event described in Section 4041,
4042, 4062 or 4063 of ERISA has occurred in connection with any JSC Employee
Plans other than any reportable event which would not, individually or in the
aggregate, be reasonably expected to have a JSC Material Adverse Effect. No
condition exists and no event has occurred that could constitute grounds for
termination of any JSC Employee Plans other than any such terminations that
would not, individually or in the aggregate, be reasonably expected to have a
JSC Material Adverse Effect. Neither JSC nor any JSC ERISA Affiliate has any
material unsatisfied liability under Title IV of ERISA in connection with the
termination of, or complete or partial withdrawal from, any plan covered or
previously covered by Title IV of ERISA. Nothing done or omitted to be done
and no transaction or holding of any asset under or in connection with any JSC
Employee Plan has or will make JSC or any of its Subsidiaries or any officer
or director of JSC or any of its Subsidiaries subject to any liability under
Title I of ERISA or liable for any Tax pursuant to Section 4975 of the Code
that would, individually or in the aggregate, be reasonably expected to have a
JSC Material Adverse Effect. For purposes of this Section, "JSC ERISA
Affiliate" means any other Person which, together with JSC, would be treated
as a single employer under Section 414 of the Code.
(c) Each JSC Employee Plan that is intended to be qualified under
Section 401(a) of the Code has received a determination letter from the IRS
that it is so qualified and, to the knowledge of JSC, is so qualified and has
been so qualified during the period since its adoption. To the knowledge of
JSC, each trust created under any such JSC Employee Plan is exempt from tax
under Section 501(a) of the Code and, to the knowledge of JSC, has been so
exempt since its creation. JSC has made available to JSC the most recent
determination letter of the IRS relating to each such JSC Employee Plan. Each
JSC Employee Plan has been maintained in substantial compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules
and regulations, including, but not limited to, ERISA and the Code, which are
applicable to such JSC Employee Plan, excluding any instances of
non-compliance that would not, individually or in the aggregate, be reasonably
expected to have a JSC Material Adverse Effect.
(d) The JSC Disclosure Schedule contains a list of each material
employment, severance or other similar contract, arrangement or policy and
each plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which is not a JSC Employee Plan, is
entered into, maintained or contributed to, as the case may be, by JSC or any
of its Affiliates and covers any employee or former employee of JSC or any of
its Subsidiaries. Such contracts, plans and arrangements as are described
above, copies or descriptions of all of which have been furnished previously to
JSC, are referred to collectively herein as the "JSC Benefit Arrangements".
Each JSC Benefit Arrangement has been maintained in substantial compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations that are applicable to such JSC Benefit
Arrangement, excluding any instances of non-compliance that would not,
individually or in the aggregate, be reasonably expected to have a JSC
Material Adverse Effect.
(e) No JSC Employee Plan, JSC Benefit Arrangement or related
document contains any provision that would prevent JSC or any of its
Subsidiaries from amending or terminating any post-retirement health, medical
or life insurance benefits and, to the knowledge of JSC, no agent or
representative of JSC or any of its Affiliates has made any statements that
would limit the ability of JSC or any of its Subsidiaries to amend or terminate
any such benefits.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by JSC or any of its Affiliates relating
to, or change in employee participation or coverage under, any JSC Employee
Plans or JSC Benefit Arrangement which would increase materially the expense
of maintaining such JSC Employee Plans or JSC Benefit Arrangement above the
level of the expense incurred in respect thereof for the fiscal year ended on
the closing date of the JSC Balance Sheet.
(g) The execution of, and the performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any JSC
Employee Plan, JSC Benefit Arrangement, trust or loan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current or former employee,
director or consultant of JSC or any of its Subsidiaries, or result in the
triggering or imposition of any restrictions or limitations on the right of
JSC, JSC or any of its Subsidiaries to amend or terminate any JSC Employee
Plans and receive the full amount of any excess assets remaining or resulting
from such amendment or termination, subject to applicable taxes. There is no
contract, agreement, plan or arrangement covering any employee or former
employee of JSC or any of its Subsidiaries that, individually or in the
aggregate, could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Sections 162(a)(1), 162(i)(2) or 280G of
the Code.
(h) No work stoppage, labor strike or slowdown against JSC or any
of its Subsidiaries is pending or threatened. Neither JSC nor any of its
Subsidiaries is involved in or threatened with any labor dispute or grievance
which, individually or in the aggregate, has had or would be reasonably
expected to have a JSC Material Adverse Effect. To the knowledge of JSC there
is no organizing effort or representation question at issue with respect to
any employee of JSC or any of its Subsidiaries. No collective bargaining
agreement to which JSC or any of its Subsidiaries is or may be a party is
currently under negotiation or renegotiation and no existing collective
bargaining agreement is due for expiration, renewal or renegotiation within the
one year period after the date hereof.
Section 4.15. Transactions with Affiliates. Since the date of
JSC's last proxy statement prior to the date of this Agreement, there have
been no transactions, agreements, arrangements or understandings between JSC
or its Subsidiaries, on the one hand, and JSC's Affiliates (other than
wholly-owned Subsidiaries of JSC) or other Persons, on the other hand, that
would be required to be disclosed under Item 404 of Regulation S-K under the
Securities Act.
Section 4.16. Information Supplied. The information supplied
by JSC for inclusion in the Registration Statement shall not at the time the
Registration Statement is declared effective by the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
information supplied by JSC for inclusion in the Proxy Statement
to be sent to the stockholders of Stone in connection with the Stone
Stockholders' Meeting and to the stockholders of JSC in connection with the
JSC Stockholders' Meeting shall not, on the date the Proxy Statement is first
mailed to the stockholders of Stone and JSC or at the time of the
Stockholders' Meetings, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 4.17. Opinion of Financial Advisor. ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co. has delivered to JSC a written opinion dated the date of this Agreement to
the effect that the Exchange Ratio is fair from a financial point of view to
JSC. JSC has delivered to Stone a copy of such opinion.
Section 4.18. Finders' Fees. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and ▇▇ ▇▇▇▇▇▇▇▇▇▇, a copy of each of whose
engagement agreement has been provided to Stone, no investment banker, broker,
finder, other intermediary or other Person is entitled to any investment
banking, broker's, finder's or similar fee or commission from JSC or any of
its Subsidiaries upon consummation of the transactions contemplated by this
Agreement.
Section 4.19. Non-Recourse Debt and Obligations. JSC has no
guarantees, keep-well arrangements nor any liabilities with respect to the
indebtedness of the JSC entities listed in Section 4.19 of the JSC Disclosure
Schedule, and, except as provided therein, has no continuing financial or
commercial obligations to such entities, including with respect to the support
or funding of such entities.
ARTICLE 5
Conduct of Business
Section 5.1. Conduct of Stone. Stone agrees that from the date
hereof until the Effective Time, except as set forth in the Stone Disclosure
Schedule or as otherwise expressly contemplated by the Transaction Agreements
or with the prior written consent of JSC, Stone and its Subsidiaries shall
conduct their business in the ordinary course consistent with past practice
and shall use their reasonable best efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers and employees. Without limiting the
generality of the foregoing, from the date hereof until the Effective Time,
except as set forth in the Stone Disclosure Schedule or as expressly
contemplated by the Transaction Agreements, without the prior written consent
of JSC, Stone will not, and will not permit any of its Subsidiaries to:
(a) adopt or propose any change in its certificate of
incorporation or bylaws or equivalent documents;
(b) amend any material term of any outstanding security of Stone or
any of its Subsidiaries;
(c) merge or consolidate with any other Person;
(d) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee, encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license, guarantee or encumbrance of, (i)
any shares of capital stock of Stone or any of its Subsidiaries (other than
the issuance of shares by a wholly owned Subsidiary of Stone to Stone or
another wholly owned Subsidiary of Stone), or securities convertible or
exchangeable or exercisable for any shares of such capital stock, or any
options, warrants or other rights of any kind to acquire any shares of such
capital stock or such convertible or exchangeable securities, or any other
ownership interest of Stone or any of its Subsidiaries or (ii) except in the
ordinary course of business and in a manner consistent with past practice, any
property or assets (including, without limitation, by merger, consolidation,
spinoff or other dispositions of stock or assets) of Stone or any of its
Subsidiaries, except in the case of either clause (i) or (ii) (A) the issuance
of Stone Common Stock upon the exercise of Stone Stock Options or the
conversion or exchange of Stone's outstanding convertible preferred stock or
convertible debt, (B) the award of options in connection with promotions and
new employee hires in the ordinary course of business and consistent with past
practice, (C) pursuant to contracts or agreements in force at the date of this
Agreement, (D) sales, transfers or dispositions of receivables in connection
with the securitization of such receivables, (E) the calling for redemption of
Stone's 8 7/8% Convertible Senior Subordinated Notes or (F) sales or other
dispositions of property and assets of Stone and its Subsidiaries listed on
Section 5.01(d) of the Stone Disclosure Schedule in an aggregate amount that
does not exceed $390,000,000 less the amount of indebtedness for borrowed
money incurred by Stone and its Subsidiaries pursuant to Section
5.01(i)(ii)(B) (except to the extent that the proceeds from such indebtedness
to be incurred under such clause (B) will be used to repay borrowings under
Section 5.01(i)(ii)(C)(y)) or pursuant to Section 5.01(i)(ii)(C)(y); provided
that the proceeds of these sales or other dispositions are used by Stone to
make payments on its senior debt;
(e) create or incur any material Lien on any material asset other
than in the ordinary course of business and consistent with past practice;
(f) make any material loan, advance or capital contributions to or
investments in any Person other than loans, advances or capital contributions
to or investments in wholly owned Subsidiaries of Stone made in the ordinary
course and consistent with past practice;
(g) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to
any of its capital stock (except for dividends paid by any direct or indirect
wholly owned Subsidiary of Stone to Stone or to any other direct or indirect
wholly owned Subsidiary of Stone in the ordinary course and consistent with
past practice and except for the regular quarterly cash dividend of $0.4375
per share of Stone Series E Preferred Stock together with any accrued but
unpaid dividends in respect of prior quarters) or enter into any agreement
with respect to the voting of its capital stock;
(h) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock, except in
connection with (x) conversions of Stone Series E Preferred Stock by the
holders thereof and (y) any redemption of the Rights during the ten business
days prior to the Effective Time (which redemption shall be in the sole
discretion of Stone);
(i) (i) acquire (including, without limitation, by merger,
consolidation, spinoff or acquisition of stock or assets) any interest in any
Person or any division thereof (other than a wholly owned Subsidiary) or any
assets, other than acquisitions of assets in the ordinary course of business
and consistent with past practice and any other acquisitions for consideration
that does not exceed $3,000,000 individually or $15,000,000 in the aggregate,
(ii) incur any indebtedness for borrowed money or guarantee such indebtedness
of another Person, or issue or sell any debt securities or warrants or other
rights to acquire any debt security of Stone or any of its Subsidiaries,
except for (A) indebtedness for borrowed money incurred in the ordinary course
of business and consistent with past practice or in connection with
transactions otherwise permitted under this Section 5.01, (B) other
indebtedness for borrowed money with a maturity of not more than 1 year in a
principal amount not, in the aggregate, in excess of $100,000,000, less
amounts borrowed under clause (C)(y) below (except that such reduction shall
not apply to the extent that the proceeds from such indebtedness to be
incurred under this clause (B) will be used to repay borrowings under clause
(C)(y) below) and (C) other indebtedness for borrowed money incurred under
Stone's revolving credit agreement for (x) working capital purposes and for
(y) the repayment of any of the outstanding senior debt of Stone and its
Subsidiaries, (iii) terminate, cancel, waive any rights under or request any
material change in, or agree to any material change in, any Stone Material
Contract or, except in connection with transactions permitted under this
Section 5.01(i), enter into any contract or agreement material to the
business, results of operations or financial condition of Stone and its
Subsidiaries, taken as a whole, in either case other than in the ordinary
course of business and consistent with past practice, (iv) make or authorize
any capital expenditure, other than capital expenditures that are not, in the
aggregate, in excess of $25,000,000 from the date of this Agreement through
June 30, 1998 and $37,500,000 during any calendar quarter thereafter, for
Stone and its Subsidiaries, taken as a whole; provided that any capital
expenditure allowance unused during any period may be carried forward to
increase the capital expenditure allowance for the succeeding period or (v)
enter into or amend any contract, agreement, commitment or arrangement that,
if fully performed, would not be permitted under this Section 5.01(i);
(j) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and
consistent with past practice or except as required by changes in generally
accepted accounting principles;
(k) make any material Tax election or take any position on any Tax
Return filed on or after the date of this Agreement or adopt any method
therefor that is inconsistent with elections made, positions taken or methods
used in preparing or filing similar Returns in prior periods;
(l) except as may be required by contractual commitments or
corporate policies with respect to severance or termination pay in existence on
the date hereof, (i) increase the compensation payable or to become payable to
its officers or employees (except for increases in the ordinary course of
business and consistent with past practice in salaries or wages of employees of
Stone or any of its Subsidiaries), (ii) establish, adopt, enter into or amend
any collective bargaining, bonus, profit sharing, thrift, compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee,
except as contemplated by this Agreement or to the extent required by
applicable law or the terms of a collective bargaining agreement, (iii)
increase the benefits payable under any existing severance or termination pay
policies or employment or other agreements or (iv) take any affirmative action
to accelerate the vesting of any stock-based compensation;
(m) take any action that, individually or in the aggregate, would
reasonably be expected to make any representation and warranty of Stone
hereunder untrue in any material respect at, or as of any time prior to, the
Effective Time; or
(n) agree or commit to do any of the foregoing.
Section 5.2. Conduct of JSC. JSC agrees that from the date
hereof until the Effective Time, except as set forth in Section 5.02 of the JSC
Disclosure Schedule or as otherwise expressly contemplated by the Transaction
Agreements or with the prior written consent of Stone, JSC and its
Subsidiaries shall conduct their business in the ordinary course consistent
with past practice and shall use their reasonable best efforts to preserve
intact their business organizations and relationships with third parties and
to keep available the services of their present officers and employees.
Without limiting the generality of the foregoing, from the date hereof until
the Effective Time, except as set forth in the JSC Disclosure Schedule or as
expressly contemplated by the Transaction Agreements, without the prior
written consent of Stone, JSC will not, and will not permit any of its
Subsidiaries to:
(a) adopt or propose any change in its certificate of
incorporation or bylaws or equivalent documents;
(b) amend any material term of any outstanding security of JSC or
any of its Subsidiaries;
(c) merge or consolidate with any other Person;
(d) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee, encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license, guarantee or encumbrance of, (i)
any shares of capital stock of JSC or any of its Subsidiaries (other than the
issuance of shares by a wholly owned subsidiary of JSC to JSC or another
wholly owned Subsidiary of JSC), or securities convertible or exchangeable or
exercisable for any shares of such capital stock, or any options, warrants or
other rights of any kind to acquire any shares of such capital stock or such
convertible or exchangeable securities, or any other ownership interest of JSC
or any of its Subsidiaries or (ii) except in the ordinary course of business
and in a manner consistent with past practice, any property or assets
(including, without limitation, by merger, consolidation, spinoff or other
dispositions of stock or assets) of JSC or any of its Subsidiaries, except in
the case of either clause (i) or (ii) (A) the issuance of JSC Common Stock
upon the exercise of JSC Stock Options, (B) the award of options in connection
with promotions and new employee hires in the ordinary course of business and
consistent with past practice, (C) pursuant to contracts or agreements in
force at the date of this Agreement, (D) sales, transfers or dispositions of
receivables in connection with the securitization of such receivables or (E)
sales or other dispositions of property and assets of JSC and its Subsidiaries
listed on Section 5.02(d) of the JSC Disclosure Schedule in an aggregate
amount that does not exceed $390,000,000 less the amount of indebtedness for
borrowed money incurred by JSC and its Subsidiaries pursuant to Section
5.02(i)(ii)(B);
(e) create or incur any material Lien on any material asset other
than in the ordinary course of business and consistent with past practice;
(f) make any material loan, advance or capital contributions to or
investments in any Person other than loans, advances or capital contributions
to or investments in wholly owned Subsidiaries of JSC made in the ordinary
course and consistent with past practices;
(g) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to
any of its capital stock (except for dividends paid by any direct or indirect
wholly owned Subsidiary of JSC to JSC or to any other direct or indirect
wholly owned Subsidiary of JSC in the ordinary course and consistent with past
practice) or enter into any agreement with respect to the voting of its
capital stock;
(h) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(i) (i) acquire (including, without limitation, by merger,
consolidation or acquisition of stock or assets) any interest in any Person or
any division thereof (other than a wholly owned Subsidiary) or any assets,
other than acquisitions of assets in the ordinary course of business and
consistent with past practice and any other acquisitions for consideration
that is not, in the aggregate, in excess of $20,000,000, (ii) incur any
indebtedness for borrowed money or guarantee such indebtedness of another
Person, or issue or sell any debt securities or warrants or other rights to
acquire any debt security of JSC of any of its Subsidiaries, except for (A)
indebtedness for borrowed money incurred in the ordinary course of business
and consistent with past practice or in connection with transactions otherwise
permitted under this Section 5.02, (B) other indebtedness for borrowed money
with a maturity of not more than 1 year in a principal amount not, in the
aggregate, in excess of $100,000,000, and (C) other indebtedness for borrowed
money incurred under JSC's revolving credit agreement for working capital
purposes only and not for the repayment of any of the outstanding public debt
of JSC and its Subsidiaries, (iii) terminate, cancel, waive any rights under
or request any material change in, or agree to any material change in, any JSC
Material Contract or, except in connection with transactions permitted under
this Section 5.02(i), enter into any contract or agreement material to the
business, results of operations or financial condition of JSC and its
Subsidiaries, taken as a whole, in either case other than in the ordinary
course of business and consistent with past practice, (iv) make or authorize
any capital expenditure, other than capital expenditures that are not, in the
aggregate, in excess of $25,000,000 from the date of this Agreement through
June 30, 1998 and $37,500,000 during any calendar quarter thereafter, for JSC
and its Subsidiaries, taken as a whole; provided that any capital expenditure
allowance unused during any period may be carried forward to increase the
capital expenditure allowance for the succeeding period, or (v) enter into or
amend any contract, agreement, commitment or arrangement that, if fully
performed, would not be permitted under this Section 5.02(i);
(j) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and
consistent with past practice or except as required by changes in generally
accepted accounting principles;
(k) make any material Tax election or take any position on any Tax
Return filed on or after the date of this Agreement or adopt any method
therefor that is inconsistent with elections made, positions taken or methods
used in preparing or filing similar Returns in prior periods;
(l) except as may be required by contractual commitments or
corporate policies with respect to severance or termination pay in existence on
the date hereof, (i) increase the compensation payable or to become payable to
its officers or employees (except for increases in the ordinary course of
business and consistent with past practice in salaries or wages of employees of
JSC or any of its Subsidiaries), (ii) establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, except as
contemplated by this Agreement or to the extent required by applicable law or
the terms of a collective bargaining agreement, (iii) increase the benefits
payable under any existing severance or termination pay policies or employment
or other agreements or (iv) take any affirmative action to accelerate the
vesting of any stock-based compensation;
(m) take any action that would, individually or in the aggregate,
reasonably be expected to make any representation and warranty of JSC
hereunder untrue in any material respect at, or as of any time prior to, the
Effective Time; or
(n) agree or commit to do any of the foregoing.
ARTICLE 6
Additional Agreements
Section 6.1. No Solicitation. (a) Stone and JSC each agree that
it shall not, nor shall it permit any of its Subsidiaries to, nor shall it
authorize or permit any officer, director or employee or any investment banker,
attorney, accountant, agent or other advisor or representative of Stone or JSC,
as the case may be, or any of their respective Subsidiaries to, (i) solicit,
initiate or knowingly encourage the submission of any Takeover Proposal, (ii)
enter into any agreement with respect to a Takeover Proposal or (iii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal; provided, however, that to the
extent required by the fiduciary obligations of the Board of Directors of Stone
or JSC, as the case may be, as determined in good faith by a majority of the
members thereof (after consultation with outside legal counsel), such party may,
in response to unsolicited requests therefor, participate in discussions or
negotiations with, or furnish information pursuant to a confidentiality
agreement no less favorable to such party than the Confidentiality Agreement to,
any Person who indicates a willingness to make a Superior Proposal. For all
purposes of this Agreement, "Takeover Proposal" means any proposal for a merger,
consolidation, share exchange, business combination or other similar transaction
involving Stone or JSC, as the case may be, or any of their respective
Significant Subsidiaries or any proposal or offer to acquire, directly or
indirectly, an equity interest in, any voting securities of, or a substantial
portion of the assets of, Stone or JSC, as the case may be, or any of their
respective Significant Subsidiaries, other than the transactions contemplated by
this Agreement or the transactions contemplated by Section 6.01(a) of the Stone
Disclosure Schedule. Each of Stone and JSC immediately shall cease and cause to
be terminated all existing discussions or negotiations with any Persons
conducted heretofore with respect to, or that could reasonably be expected to
lead to, any Takeover Proposal. As used herein, a "Significant Subsidiary"
means any Subsidiary that would constitute a "significant subsidiary" within the
meaning of Rule 1-02 of Regulation S-X of the SEC.
(b) Neither the Board of Directors of Stone nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to JSC or Sub, the approval or recommendation by the Board of
Directors of Stone or any such committee of this Agreement or the Merger or
the amendments to the Stone certificate of incorporation contemplated hereby
or (ii) approve or recommend, or propose to approve or recommend, any Takeover
Proposal. Neither the Board of Directors of JSC nor any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Stone, the approval or recommendation by the Board of Directors of
JSC or any such committee of the issuance of shares of JSC Common Stock in the
Merger or the amendments to the JSC certificate of incorporation contemplated
hereby or (ii) approve or recommend, or propose to approve or recommend, any
Takeover Proposal. Notwithstanding the foregoing, (i) the Board of Directors
of Stone or JSC, to the extent required by its fiduciary obligations, as
determined in good faith by a majority of the members thereof (after
consultation with outside legal counsel), may approve or recommend a Superior
Proposal (and, in connection therewith, withdraw or modify its approval or
recommendation of this Agreement or the Merger or the amendments to the Stone
certificate of incorporation contemplated hereby (in the case of Stone) and
the issuance of shares of JSC Common Stock in the Merger or the amendments to
the JSC certificate of incorporation as contemplated hereby (in the case of
JSC)) and (ii) nothing contained in this Agreement shall prevent the Board of
Directors of Stone or JSC from complying with Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act with regard to a Takeover Proposal. For
all purposes of this Agreement, "Superior Proposal" means a bona fide written
proposal made by a third party to acquire Stone or JSC, as the case may be,
pursuant to a tender or exchange offer, a merger, a share exchange, a sale of
all or substantially all its assets or otherwise on terms which a majority of
the members of the Board of Directors of Stone or JSC, as the case may be,
determines in good faith (taking into account the advice of independent
financial advisors) to be more favorable to Stone or JSC, as the case may be,
and their respective stockholders than the Merger (and any revised proposal
made by the other party to this Agreement) and for which financing, to the
extent required, is then fully committed or reasonably determined to be
available by the Board of Directors of Stone or JSC, as the case may be.
(c) Stone and JSC shall each notify the other party promptly (but
in no event later than 24 hours) after receipt by Stone or JSC (or its
advisors), respectively, of any Takeover Proposal or any request for nonpublic
information in connection with a Takeover Proposal or for access to the
properties, books or records of such party by any Person or entity that informs
such party that it is considering making, or has made, a Takeover Proposal.
Such notice to the other party shall be made orally and in writing and shall
indicate the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact. Such party shall keep the other party informed,
on a current basis, of the status and details (including amendments or proposed
amendments) of any such Takeover Proposal or request and the status of any
negotiations or discussions.
Section 6.2. Proxy Statement; Registration Statement. (a) As
promptly as practicable after the execution of this Agreement, JSC and Stone
shall prepare and file with the SEC the Proxy Statement, and JSC shall prepare
and file with the SEC the Registration Statement (in which the Proxy Statement
will be included). JSC and Stone shall use their best efforts to cause the
Registration Statement to become effective under the Securities Act as soon
after such filing as practicable. The Proxy Statement shall include the
recommendation of the Board of Directors of Stone in favor of approval and
adoption of this Agreement and the Merger and the amendments to the Stone
certificate of incorporation contemplated by Section 1.02 hereof, except to the
extent the Board of Directors of Stone shall have withdrawn or modified its
approval or recommendation of this Agreement or the Merger or the amendments
to the Stone certificate of incorporation contemplated hereby as permitted by
Section 6.01(b), and the recommendation of the Board of Directors of JSC in
favor of approval of the issuance of JSC Common Stock in the Merger and the
amendments to the JSC certificate of incorporation contemplated by Section
1.04(a) hereof, except to the extent the Board of Directors of JSC shall have
withdrawn or modified its approval or recommendation of the issuance of shares
of JSC Common Stock in the Merger or the amendments to the JSC certificate of
incorporation contemplated hereby as permitted by Section 6.01(b). JSC shall
use best efforts to cause the Proxy Statement to be mailed to its
stockholders, and Stone shall use best efforts to cause the Proxy Statement to
be mailed to its stockholders, in each case as promptly as practicable after
the Registration Statement becomes effective.
(b) JSC and Stone shall make all necessary filings with respect to
the Merger and the transactions contemplated thereby under the Securities Act
and the Exchange Act and applicable state blue sky laws and the rules and
regulations thereunder. No filing of, or amendment or supplement to, the
Registration Statement or the Proxy Statement will be made by JSC without
providing Stone the opportunity to review and comment thereon. JSC will
advise Stone, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the
qualification of the JSC Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any information
relating to JSC or Stone, or any of their respective affiliates, officers or
directors, should be discovered by JSC or Stone which should be set forth in
an amendment or supplement to any of the Registration Statement or the Proxy
Statement, so that any of such documents would not include any misstatement
of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly
notify the other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the stockholders of JSC and Stone.
Section 6.3. Stockholders' Meetings. Stone shall duly call,
give notice of, convene and hold a meeting of its stockholders for the purpose
of voting on the adoption and approval of this Agreement and the Merger and the
amendments to the Stone certificate of incorporation contemplated hereby and,
through its Board of Directors, will recommend to its stockholders adoption
and approval of this Agreement and the Merger and the amendments to the Stone
certificate of incorporation contemplated hereby, except to the extent that
the Board of Directors of Stone shall have withdrawn or modified its approval
or recommendation of this Agreement and the Merger or the amendments to the
Stone certificate of incorporation as contemplated hereby as permitted by
Section 6.01(b). JSC shall duly call, give notice of, convene and hold a
meeting of its stockholders for the purpose of voting on the approval of the
issuance of shares of JSC Common Stock in the Merger and the amendments to the
JSC certificate of incorporation contemplated hereby and, through its Board of
Directors, will recommend to its stockholders approval of the issuance of
shares of JSC Common Stock in the Merger and the amendments to the JSC
certificate of incorporation contemplated hereby, except to that extent that
the Board of Directors of JSC shall have withdrawn or modified its approval or
recommendation of the issuance of shares of JSC Common Stock in the Merger or
the amendments to the JSC certificate of incorporation contemplated hereby as
permitted by Section 6.01(b). JSC and Stone will use best efforts to hold the
JSC Stockholders' Meeting and the Stone Stockholders' Meeting on the same date
and as soon as practicable after the date hereof. Except to the extent that
the Board of Directors of Stone shall have withdrawn or modified its approval
or recommendation as aforesaid, Stone will use best efforts to solicit from
its stockholders proxies in favor of such matters.
Section 6.4. Access to Information. Upon reasonable notice and
subject to applicable law and other legal obligations, each of Stone and JSC
shall, and shall cause each of its Subsidiaries to, afford to the officers,
employees, accountants, counsel and other representatives of the other, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records and, during such
period, each of Stone and JSC shall, and shall cause each of its Subsidiaries
to, furnish promptly to the other (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws and (b) all
other information concerning its business, properties and personnel as such
other party may reasonably request. Unless otherwise required by law, the
parties will hold any such information which is nonpublic in confidence in
accordance with the Confidentiality Agreement dated as of July 9, 1997 between
JSC and Stone, including the related letter agreements entered into by SIBV,
MSLEF and The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged Equity Fund II, L.P. (the
"Confidentiality Agreement"). No information or knowledge obtained in any
investigation pursuant to this Section 6.04 shall affect or be deemed to modify
any representation or warranty contained in this Agreement or the conditions
to the obligations of the parties to consummate the Merger.
Section 6.5. Notices of Certain Events. (a) JSC and Stone
shall promptly notify each other of:
(i) any notice or other communication from any
Person alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by this
Agreement; and
(ii) any notice or other communication from any
Governmental Authority in connection with the transactions
contemplated by this Agreement.
(b) Stone shall promptly notify JSC of any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge, threatened
against, relating to or involving or otherwise affecting Stone or any of its
Subsidiaries which, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.08 or which relate to the
consummation of the transactions contemplated by this Agreement.
(c) JSC shall promptly notify Stone of any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge, threatened
against, relating to or involving or otherwise affecting JSC or any of its
Subsidiaries which, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 4.08 or which relate to the
consummation of the transactions contemplated by this Agreement.
Section 6.6. Appropriate Action; Consents; Filings. (a) (i)
Subject to the terms and conditions of this Agreement and except to the extent
that (x) the Board of Directors of Stone shall have withdrawn or modified its
approval or recommendation of this Agreement or the Merger or the amendments
to the Stone certificate of incorporation contemplated hereby or (y) the Board
of Directors of JSC shall have withdrawn or modified its recommendation of the
approval of the issuance of shares of JSC Common Stock in the Merger or the
amendments to the JSC certificate of incorporation contemplated hereby, in
each case as permitted by Section 6.01(b), JSC and Stone shall use their best
efforts to (A) take, or cause to be taken, all actions, and do, or cause to be
done, all things, necessary, proper or advisable under applicable laws to
consummate the Merger and the other transactions contemplated by this
Agreement as promptly as practicable, (B) obtain from any Governmental
Authority any consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained or made by JSC and Stone or any of their
Subsidiaries, or to avoid any action or proceeding by any Governmental
Authority (including, without limitation, those in connection with the HSR
Act), in connection with the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated herein, and
(C) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under the
Securities Act, the Exchange Act and any other applicable law; provided that
JSC and Stone shall cooperate with each other in connection with the making
of all such filings, including providing copies of all such documents to the
non-filing party and its advisors prior to filing and, if requested, accepting
all reasonable additions, deletions or changes suggested in connection
therewith. JSC and Stone shall furnish to each other all information required
for any application or other filing to be made pursuant to the rules and
regulations of any applicable law in connection with the transactions
contemplated by this Agreement. Subject to the terms and conditions of this
Agreement and except to the extent that (x) the Board of Directors of Stone
shall have withdrawn or modified its approval or recommendation of this
Agreement or the Merger or the amendments to the Stone certificate of
incorporation contemplated hereby or (y) the Board of Directors of JSC shall
have withdrawn or modified its recommendation of the approval of the issuance
of shares of JSC Common Stock in the Merger or the amendments to the JSC
certificate of incorporation contemplated hereby, in each case as permitted by
Section 6.01(b), JSC and Stone shall not take any action, or refrain from
taking any action, the effect of which would be to delay or impede the ability
of JSC and Stone to consummate the transactions contemplated by this Agreement.
(ii) Each of the parties hereto agrees, and
shall cause each of its respective Subsidiaries to cooperate and
to use their respective best efforts, to obtain any government
clearances required for the consummation of the transactions
contemplated hereby (including through compliance with the HSR
Act and any applicable foreign governmental reporting
requirements), to respond to any government requests for
information, and to contest and resist any action, including any
legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order (whether temporary, preliminary or
permanent) that restricts, prevents or prohibits the consummation
of the Merger or any other transactions contemplated this
Agreement, including, without limitation, by vigorously pursuing
all available avenues of administrative and judicial appeal and
all available legislative action. Each of the parties hereto
also agrees to take any and all of the following actions to the
extent necessary to obtain the approval of any Governmental
Authority with jurisdiction over the enforcement of any
applicable laws regarding the Merger: entering into
negotiations; providing information; substantially complying with
any second request for information pursuant to the HSR Act;
making proposals; entering into and performing agreements or
submitting to judicial or administrative orders; selling or
otherwise disposing of, or holding separate (through the
establishment of a trust or otherwise) particular assets or
categories of assets, or businesses of JSC, Stone or any of their
respective Subsidiaries; and withdrawing from doing business in a
particular jurisdiction. The parties hereto will consult and
cooperate with one another, and consider in good faith the views
of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or in behalf of any party thereto
in connection with proceedings under or relating to the HSR Act
or any other federal, state or foreign antitrust or fair trade
law. Each party shall promptly notify the other party of any
communication to that party from any Governmental Authority in
connection with any required filing with, or approval or review
by, such Governmental Authority in connection with the Merger and
permit the other party to review in advance any such proposed
communication to any Governmental Authority. Neither party shall
agree to participate in any meeting with any Governmental
Authority in respect of any such filings, investigation or other
inquiry unless it consults with the other party in advance and,
to the extent permitted by such Governmental Authority, gives the
other party the opportunity to attend and participate thereat.
Notwithstanding any other provision of this Agreement, in
connection with seeking any such approval of a Governmental
Authority, without the other party's prior written consent,
neither party shall, and neither party shall be required to,
commit to any divestiture transaction, agree to sell or hold
separate, before or after the Effective Time, any of JSC's or
Stone's businesses, product lines, properties or assets, or agree
to any changes or restrictions in the operation of such
businesses, product lines, properties or assets, in any such case
if such divestiture or such restrictions would, individually or
in the aggregate, be reasonably expected to have a material
adverse effect on the financial condition or results of
operations of JSC and its Subsidiaries, taken as a whole, after
giving effect to the Merger.
(b) (i) JSC and Stone shall give, or shall cause their respective
Subsidiaries to give, any notices to third parties, and use, and cause their
respective Subsidiaries to use, all best efforts to obtain any third party
consents (A) necessary, proper or advisable in order to consummate the
transactions contemplated by this Agreement or (B) required to prevent a JSC
Material Adverse Effect or a Stone Material Adverse Effect from occurring
prior to or after the Effective Time.
(ii) In the event that either party shall fail
to obtain any third party consent described in Section 6.06(b)(i)
above, such party shall use all best efforts, and shall take any
such actions reasonably requested by the other party hereto, to
minimize any adverse effect upon JSC and Stone, their respective
Subsidiaries, and their respective businesses resulting, or which
could reasonably be expected to result after the Effective Time,
from the failure to obtain such consent.
Section 6.7. Public Disclosure. JSC and Stone shall consult
with each other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement or the transactions
contemplated hereby and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law, court process or by stock exchange rules.
Section 6.8. Reorganization. JSC and Stone shall each use its
best efforts to cause the Merger to be treated as a reorganization within the
meaning of Section 368(a) of the Code, and Stone shall use its best efforts to
obtain the opinion of its counsel referred to in Section 7.03(c). JSC shall
make (to the extent it can truthfully do so) the representations of JSC
contained in a certificate of JSC (the "JSC Tax Certificate") substantially in
the form of the JSC Tax Certificate contained in the JSC Disclosure Schedule,
and Stone shall make (to the extent it can truthfully do so) the
representations of Stone contained in a certificate of Stone (the "Stone Tax
Certificate") substantially in the form of the Stone Tax Certificate contained
in the Stone Disclosure Schedule.
Section 6.9. Obligations of Sub. JSC will take all action
necessary to cause Sub to perform its obligations under this Agreement and to
consummate the Merger on the terms and conditions set forth in this Agreement.
Section 6.10. Affiliates. Within 30 days of the date hereof,
Stone will provide JSC with a list of those Persons who are, in Stone's
reasonable judgment, "affiliates" of Stone within the meaning of Rule 145
under the Securities Act ("Rule 145 Affiliates"). Stone shall use its best
efforts to deliver or cause to be delivered to JSC on or prior to the Closing
Date from each of the Rule 145 Affiliates, an executed letter agreement, in
the form attached hereto as Exhibit G.
Section 6.11. Listing or Quotation of Stock. JSC shall use
its best efforts to cause the shares of JSC Common Stock to be issued in the
Merger to be approved for listing on the NYSE or approved for quotation on the
Nasdaq on or prior to the Closing Date, subject to official notice of issuance.
Section 6.12. Indemnification of Directors and Officers. (a)
JSC and the Surviving Corporation agree that the indemnification obligations
set forth in Stone's certificate of incorporation and bylaws, in each case as
of the date of this Agreement, shall survive the Merger (and, prior to the
Effective Time, JSC shall cause the bylaws of Sub to reflect such provisions)
and shall not be amended, repealed or otherwise modified for a period of six
years after the Effective Time in any manner that would adversely affect the
rights thereunder of the individuals who on or prior to the Effective Time
were directors, officers, employees or agents of Stone or its Subsidiaries.
(b) After the Effective Time, JSC and the Surviving Corporation
shall, to the same extent and on the same terms and conditions provided for in
Stone's certificate of incorporation and bylaws, in each case as of the date of
this Agreement, to the extent consistent with applicable law, indemnify and
hold harmless, each present and former director or officer of Stone and each
Subsidiary of Stone (collectively, the "Indemnified Parties") against all costs
and expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, administrative or investigative,
arising out of or pertaining to any action or omission in their capacity as an
officer or director, in each case occurring before the Effective Time
(including the transactions contemplated by this Agreement).
(c) For a period of six years from the Effective Time, JSC shall
provide or cause the Surviving Corporation to provide to Stone's current
directors and officers liability insurance protection substantially equivalent
in kind and scope as that provided by Stone's current directors' and officers'
liability insurance policies (copies of which have been made available to JSC);
provided, however, that in no event shall JSC or the Surviving Corporation be
required to expend in any one year an amount in excess of 300% of the annual
premiums currently paid by Stone for such insurance; provided, further, that if
during such period the annual premiums for such comparable insurance coverage
exceed such amount, JSC shall be obligated to provide or cause the Surviving
Corporation to provide a policy which, in the reasonable judgment of JSC,
provides the best coverage available for a cost not exceeding such amount.
Section 6.13. Stone Stock Options. (a) As soon as practicable
following the date of this Agreement, the Stone Board of Directors (or, if
appropriate, any committee administering the Stone Stock Plans) shall adopt
such resolutions or take such other actions as may be required to effect the
following:
(i) adjust the terms of all outstanding options
to purchase shares of Stone Common Stock (the "Stone Stock
Options") granted under any plan or arrangement providing for the
grant of options to current or former officers, directors,
employees or consultants of Stone (the "Stone Stock Plans"),
whether vested or unvested, as necessary to provide that, at the
Effective Time, each Stone Stock Option outstanding immediately
prior to the Effective Time shall become vested and exercisable
and shall be amended and converted into an option to acquire, on
the same terms and conditions as were applicable under the Stone
Stock Option, the number of shares of JSC Common Stock (rounded
down to the nearest whole share) determined by multiplying the
number of shares of Stone Common Stock subject to such Stone
Stock Option by the Exchange Ratio, at a price per share of JSC
Common Stock equal to (A) the aggregate exercise price for the
shares of Stone Common Stock otherwise purchasable pursuant to
such Stone Stock Option divided by (B) the aggregate number of
shares of JSC Common Stock deemed purchasable pursuant to such
Stone Stock Option (rounded up to the nearest whole cent) (each,
as so adjusted, an "Adjusted Option"); and
(ii) make such other changes to the Stone Stock
Plans as JSC and Stone may agree are appropriate to give effect
to the Merger.
(b) The adjustments provided herein with respect to any Stone Stock
Options that are "incentive stock options" as defined in Section 422 of the
Code shall be and are intended to be effected in a manner which is consistent
with Section 424(a) of the Code.
(c) As soon as practicable following the Effective Time, JSC shall
prepare and file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of JSC Common Stock equal to
the number of shares subject to the Adjusted Options. Such registration
statement shall be kept effective (and the current status of the initial
offering prospectus or prospectuses required thereby shall be maintained) for
at least as long as any Adjusted Options remain outstanding.
(d) Except as otherwise contemplated by this Section 6.13 and
except to the extent required under the respective terms of the Stone Stock
Options or other applicable agreements, all restrictions or limitations on
transfer with respect to Stone Stock Options awarded under the Stone Stock
Plans, to the extent that such restrictions or limitations shall not have
already lapsed, shall remain in full force and effect with respect to such
options after giving effect to the Merger and the assumption of such options
by JSC as set forth above.
Section 6.14. JSC Stock Options. Effective as of the Closing,
each then outstanding option to purchase shares of JSC Common Stock granted
under the JSC Amended and Restated 1992 Stock Option Plan (as amended and
restated effective as of May 1, 1997), regardless of the extent vested and
exercisable, shall become vested and exercisable.
Section 6.15. Benefits Continuation, etc. (a) Comparable
Benefits. In addition to JSC's obligations pursuant to the next sentence, for
not less than one year following the Effective Time, JSC shall maintain, or
shall cause Stone and its Subsidiaries to maintain, compensation and employee
benefits plans and arrangements for employees of Stone and its Subsidiaries
("Affected Employees") that are, in the aggregate, no less favorable than as
provided under the Stone Benefit Arrangements and Stone Employee Plans as in
effect on the date hereof. For not less than one year following the Effective
Time, JSC shall maintain or shall cause Stone and its Subsidiaries to
maintain, for Affected Employees, welfare benefit plans that are, on an
individual basis, no less favorable than as provided under the welfare benefit
plans listed in Section 6.15 of the Stone Disclosure Schedule. Without
limiting the generality of the foregoing, for not less than one year following
the Effective Time, JSC shall provide, or cause Stone and its Subsidiaries to
provide, severance pay and other severance benefits to each Affected Employee
as of the Effective Time that are no less favorable than under the Stone
Employee Plans and current practices of Stone as in effect as of the date of
this Agreement. Notwithstanding the foregoing, JSC shall have the right (i)
following the Effective Time to transfer to one or more employee benefit plans
maintained by JSC any employee of Stone or any Subsidiary who becomes an
employee of JSC or any of its Subsidiaries and (ii) in the good faith exercise
of its managerial discretion, to terminate the employment of any employee.
Nothing in this Agreement shall be construed as granting to any employee any
rights of continuing employment.
(b) Honoring Stone Employee Plans and Accrued Vacation. JSC
shall, or shall cause Stone to, honor all Stone Employee Plans and other
contractual commitments in effect immediately prior to the Effective Time
between Stone or its Subsidiaries and Affected Employees or former employees
of Stone or its Subsidiaries. Without limiting the generality or the
foregoing, JSC shall honor all vacation, holiday, sickness and personal days
accrued by Affected Employees and, to the extent applicable, former employees
of Stone and its Subsidiaries ("Former Employees") as of the Effective Time.
(c) Participation in Benefit Plans. Employees and, to the extent
applicable, Former Employees shall be given credit for all service with Stone
and its Subsidiaries (or service credited by Stone or such Subsidiaries) under
all employee benefit plans and arrangements currently maintained by JSC or any
of its Subsidiaries in which they are or become participants for purposes of
eligibility, vesting, level of participant contribution and benefit accruals
(but subject to an offset, if necessary, to avoid duplication of benefits) to
the same extent as if rendered to JSC or any of its Subsidiaries. JSC shall
cause to be waived any pre-existing condition limitation under its welfare
plans that might otherwise apply to an Affected Employee or, to the extent
applicable, a Former Employee. JSC agrees to recognize (or cause to be
recognized) the dollar amount of all expenses incurred by Affected Employees
or, to the extent applicable, Former Employees, during the calendar year in
which the Effective Time occurs for purposes of satisfying the calendar year
deductions and co-payment limitations for such year under the relevant benefit
plans of JSC and its Subsidiaries.
Section 6.16. Certain Other Employee Benefits Matters. Each
of JSC and Stone may take the actions indicated by it in Schedule 6.16 to their
respective Disclosure Schedules at or prior to the times specified therein.
Section 6.17. Convertible Debt. Stone and JSC shall take all
necessary action to enter into supplemental indentures prior to the Effective
Time with the trustees under the indentures pursuant to which the Convertible
Notes and Convertible Debentures were issued that provide, among other things,
that from and after the Effective Time the Convertible Notes and Convertible
Debentures will be convertible only into the consideration payable to holders
of shares of Stone Common Stock in the Merger.
Section 6.18. Confidentiality Agreement. The parties hereto
agree that the Confidentiality Agreement shall be hereby amended to provide
that any provision therein which in any manner would be inconsistent with this
Agreement or the transactions contemplated hereby shall terminate as of the
date hereof. The parties further agree that the Confidentiality Agreement
shall terminate as of the Effective Time.
Section 6.19. Takeover Statutes. If any Takeover Statute is
or may become applicable to the Merger, each of JSC and Stone shall take such
actions as are necessary so that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize
the effects of any Takeover Statute on the Merger and such other transactions.
Section 6.20. Rights Agreement. Stone shall not redeem the
Rights issued under the Rights Agreement or terminate the Rights Agreement
until immediately prior to the Effective Time unless required to do so by a
court of competent jurisdiction.
Section 6.21. Headquarters; Logo. As soon as practicable
following the Effective Time, JSC shall take all action necessary to locate
JSC's corporate headquarters in Chicago, Illinois. The logo of JSC prior to
the Effective Time shall be the logo of JSC after the Effective Time.
Section 6.22. Stock Purchase Agreement. JSC covenants and
agrees that it shall not amend, modify or waive any provision of the Stock
Purchase Agreement or agree to terminate the Stock Purchase Agreement, in each
case without the consent of Stone.
ARTICLE 7
Conditions to Merger
Section 7.1. Conditions to Each Party's Obligations. The
respective obligations of each party to this Agreement to consummate the
Merger and the transactions contemplated hereby shall be subject to the
satisfaction of the following conditions:
(a) Stockholder Approvals. (i) This Agreement and the Merger and
the amendments to the Stone certificate of incorporation contemplated hereby
shall have been approved and adopted by the stockholders of Stone, (ii) this
Agreement and the Merger shall have been approved and adopted by the sole
stockholder of Sub and (iii) the issuance of the shares of JSC Common Stock
in the Merger and the amendments to the JSC certificate of incorporation
contemplated hereby shall have been approved by the stockholders of JSC.
(b) Waiting Periods; Approvals. The waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated, any necessary approvals under similar laws of the European Union
shall have been obtained and any other approvals required under applicable
analogous foreign laws shall have been obtained, except where the failure to
obtain such approval would not, individually or in the aggregate, be reasonably
expected to have a material adverse effect on the financial condition or
results of operations of JSC and its Subsidiaries, taken as a whole, after
giving effect to the Merger.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint shall prohibit
the consummation of the Merger.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(e) Listing or Quotation of Stock. The shares of JSC Common Stock
to be issued in the Merger shall have been approved for listing on the NYSE
or approved for quotation on the Nasdaq, subject to official notice of
issuance.
(f) Consummation of Stock Purchase. The consummation of the stock
purchase pursuant to the Stock Purchase Agreement shall occur concurrently
with consummation of the Merger (it being understood that the purchase of
shares of JSC Common Stock thereunder shall be deemed not to occur until the
Merger has occurred).
Section 7.2. Additional Conditions to Obligations of JSC and
Sub. The obligations of JSC and Sub to consummate the Merger and the
transactions contemplated hereby shall be subject to the satisfaction of the
following additional conditions, any of which, subject to Section 9.06, may be
waived in writing exclusively by JSC:
(a) Representations and Warranties. The representations and
warranties of Stone set forth in this Agreement that are qualified as to Stone
Material Adverse Effect shall be true and correct as of the Closing Date and
the representations and warranties that are not so qualified, taken together,
shall be true and correct in all material respects, in each case as though made
on and as of the Closing Date (except to the extent any such representation or
warranty expressly speaks as of an earlier date); and JSC and Sub shall have
received a certificate signed on behalf of Stone by an executive officer of
Stone to such effect.
(b) Performance of Obligations. Stone shall have performed in all
material respects each obligation and agreement and shall have complied in all
material respects with each covenant required to be performed and complied
with by it under this Agreement at or prior to the Effective Time; and JSC and
Sub shall have received a certificate signed on behalf of Stone by an executive
officer of Stone to such effect.
Section 7.3. Additional Conditions to Obligations of Stone.
The obligation of Stone to effect the Merger is subject to the satisfaction of
each of the following additional conditions, any of which may be waived, in
writing, exclusively by Stone:
(a) Representations and Warranties. The representations and
warranties of JSC and Sub set forth in this Agreement that are qualified as to
JSC Material Adverse Effect shall be true and correct as of the Closing Date
and the representations and warranties that are not so qualified, taken
together, shall be true and correct in all material respects, in each case as
though made on and as of the Closing Date (except to the extent any such
representation or warranty expressly speaks as of an earlier date); and Stone
shall have received a certificate signed on behalf of JSC by an executive
officer of JSC and on behalf of Sub by an executive officer of Sub to such
effect.
(b) Performance of Obligations. Each of JSC and Sub shall have
performed in all material respects each obligation and agreement and shall
have complied in all material respects with each covenant required to be
performed or complied with by it under this Agreement at or prior to the
Effective Time; and Stone shall have received a certificate signed on behalf of
JSC by an executive officer of JSC and on behalf of Sub by an executive
officer of Sub to such effect.
(c) Tax Opinion. Stone shall have received a written opinion from
Sidley & Austin, counsel to Stone, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. In rendering such opinion, such counsel may
require and rely upon reasonable representations and certificates of JSC
(including, without limitation, representations contained in the JSC Tax
Certificate), Sub, Stone (including, without limitation, representations
contained in the Stone Tax Certificate); and JSC, Sub and Stone will make such
representations and deliver such certificates.
ARTICLE 8
Termination
Section 8.1. Termination. This Agreement may be terminated at
any time prior to the Effective Time (with respect to Sections 8.01(b) through
8.01(m), by written notice by the terminating party to the other party),
whether before or after approval of the matters presented in connection with
the Merger by the stockholders of JSC or the stockholders of Stone:
(a) by mutual written consent of JSC and Stone; or
(b) by either JSC or Stone, if the Merger shall not have been
consummated by December 31, 1998 (the "End Date"); provided, however, that the
right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Merger to
occur on or before the End Date; or
(c) by either JSC or Stone, if a court of competent jurisdiction or
other Governmental Authority shall have issued a final, non-appealable order,
decree or ruling, or taken any other action, having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; or
(d) by either JSC or Stone (i) if, at the Stone Stockholders'
Meeting (including any adjournment or postponement thereof), the requisite
vote of the stockholders of Stone in favor of this Agreement and the Merger
and the amendments to the Stone certificate of incorporation contemplated
hereby shall not have been obtained or (ii) if, at the JSC Stockholders'
Meeting (including any adjournment or postponement thereof), the requisite
vote of the stockholders of JSC in favor of the issuance of shares of JSC
Common Stock in the Merger and the amendments to the JSC certificate of
incorporation contemplated hereby shall not have been obtained; or
(e) by Stone, if the Board of Directors of JSC shall not have
recommended or shall have modified in a manner materially adverse to Stone its
recommendation of the issuance of shares of JSC Common Stock in the Merger or
the amendments to the JSC certificate of incorporation contemplated hereby; or
(f) by Stone, if JSC or any of its Affiliates shall have
materially and knowingly breached the covenant contained in Section 6.01; or
(g) by Stone or JSC, if the Board of Directors of JSC shall have
determined to recommend a Takeover Proposal to its stockholders and to enter
into a binding written agreement concerning such Takeover Proposal after
determining, pursuant to Section 6.01, that such Takeover Proposal constitutes
a Superior Proposal; provided that JSC may not exercise its right to terminate
under this Section 8.01(g) (and may not enter into a binding written agreement
with respect to such Takeover Proposal) until 45 days after the date of this
Agreement, but not later than the date that is the later of (x) the date that
is 120 days after the date hereof and (y) the date on which the necessary
approvals from the JSC stockholders are obtained, and unless and until (i) JSC
shall have provided Stone prior written notice at least five business days
prior to such termination that the Board of Directors of JSC has authorized and
intends to effect the termination of this Agreement pursuant to this Section
8.01(g), specifying the material terms and conditions of such Takeover
Proposal and attaching the most current version of the agreement relating
thereto, (ii) Stone does not make, within five business days of receipt of
JSC's written notice, an offer such that the Board of Directors of JSC
determines, in good faith and after consultation with its financial advisors,
that the foregoing Takeover Proposal no longer constitutes a Superior
Proposal, (iii) JSC shall otherwise be in compliance with its obligations
under this Agreement (including, without limitation, Section 6.01) and (iv) on
or prior to such termination JSC shall have paid to Stone the fee provided for
in Section 8.03(d); in connection with the foregoing, JSC agrees that it will
not enter into a binding agreement with respect to such a Takeover Proposal
until at least the fifth business day after it has provided the notice to
Stone required hereby and that it will notify Stone promptly if its intention
to enter into such written agreement shall change at any time after giving
such notification; or
(h) by JSC, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of Stone set forth
in this Agreement shall have occurred which would cause the conditions set
forth in Sections 7.02(a) or 7.02(b) not to be satisfied, and such conditions
are incapable of being satisfied by the End Date; or
(i) by JSC, if the Board of Directors of Stone shall not have
recommended or shall have modified in a manner materially adverse to JSC its
recommendation of this Agreement and the Merger or the amendments to the Stone
certificate of incorporation contemplated hereby; or
(j) by JSC, if Stone or any of its Affiliates shall have
materially and knowingly breached the covenant contained in Section 6.01; or
(k) by JSC or Stone, if the Board of Directors of Stone shall have
determined to recommend a Takeover Proposal to its stockholders and to enter
into a binding written agreement concerning such Takeover Proposal after
determining, pursuant to Section 6.01, that such Takeover Proposal constitutes
a Superior Proposal; provided that Stone may not exercise its right to
terminate under this Section 8.01(k) (and may not enter into a binding written
agreement with respect to such Takeover Proposal) until 45 days after the date
of this Agreement, but not later than the date that is the later of (x) the
date that is 120 days after the date hereof and (y) the date on which the
necessary approvals from the Stone stockholders are obtained, and unless and
until (i) Stone shall have provided JSC prior written notice at least five
business days prior to such termination that the Board of Directors of Stone
has authorized and intends to effect the termination of this Agreement
pursuant to this Section 8.01(k), specifying the material terms and conditions
of such Takeover Proposal and attaching the most current version of the
agreement relating thereto, (ii) JSC does not make, within five business days
of receipt of Stone's written notice, an offer such that the Board of
Directors of Stone determines, in good faith and after consultation with its
financial advisors, that the foregoing Takeover Proposal no longer constitutes
a Superior Proposal, (iii) Stone shall otherwise be in compliance with its
obligations under this Agreement (including, without limitation, Section 6.01)
and (iv) on or prior to such termination Stone shall have paid to JSC the fee
provided for in Section 8.03(b); in connection with the foregoing, Stone
agrees that it will not enter into a binding agreement with respect to such a
Takeover Proposal until at least the fifth business day after it has provided
the notice to JSC required hereby and that it will notify JSC promptly if its
intention to enter into such written agreement shall change at any time after
giving such notification; or
(l) by Stone, if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of JSC or Sub set
forth in this Agreement shall have occurred which would cause the conditions
set forth in Sections 7.03(a) or 7.03(b) not to be satisfied, and such
conditions are incapable of being satisfied by the End Date; or
(m) (i) by Stone if a third party or group (other than the
parties to the JSC Voting Agreements) shall have acquired ownership of a
majority of the then outstanding shares of JSC Common Stock or (ii) by JSC if
a third party or group (other than the parties to the Stone Voting Agreement)
shall have acquired ownership of a majority of the then outstanding shares of
Stone Common Stock.
Section 8.2. Effect of Termination. In the event of
termination of this Agreement pursuant to Section 8.01, there shall be no
liability or obligation on the part of JSC, Stone, Sub, or their respective
officers, directors, stockholders or Affiliates, except as set forth in
Section 8.03 and except to the extent that such termination results from the
willful breach by a party of any of its representations, warranties, covenants
or agreements contained in this Agreement; provided that the provisions of
Sections 8.03, 9.02 and 9.07 of this Agreement and the Confidentiality
Agreement shall remain in full force and effect and survive any termination of
this Agreement.
Section 8.3. Fees and Expenses. (a) Except as set forth in
this Section 8.03, all fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Merger is consummated; provided,
however, that JSC and Stone shall share equally all fees and expenses, other
than attorneys' and accounting fees and expenses, incurred in relation to the
printing and filing of the Proxy Statement (including any related preliminary
materials) and the Registration Statement (including financial statements and
exhibits) and any amendments or supplements thereto.
(b) If this Agreement is terminated by JSC pursuant to Section
8.01(i), 8.01(j), 8.01(k) or 8.01(m)(ii) or by Stone pursuant to Section
8.01(k), Stone shall pay to JSC a termination fee of $60 million in cash within
one business day after such termination.
(c) If this Agreement is terminated by either JSC or Stone
pursuant to Section 8.01(d)(i) and a Takeover Proposal with respect to Stone
shall have been made prior to the Stone Stockholders' Meeting, Stone shall pay
to JSC a termination fee of $60 million in cash within one business day after
such termination; provided that if the Board of Directors of Stone did not
exercise any of its rights under Section 6.01 (other than a recommendation of
rejection of a Takeover Proposal pursuant to Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act) with respect to the Takeover Proposal,
such fee shall not be payable unless concurrently with or within 9 months
after such termination, a Stone Third Party Acquisition Event occurs. In such
event, Stone shall pay JSC the termination fee of $60 million in cash within
one business day of the occurrence of the Stone Third Party Acquisition Event.
A "Stone Third Party Acquisition Event" means any of the
following events: (A) any Person (other than JSC or its Affiliates) acquires
or becomes the beneficial owner of a majority of the outstanding shares of
Stone Common Stock; or (B) the consummation of a merger or other business
combination involving Stone or the completion of the acquisition of a majority
interest in, or a majority of the assets of, Stone (other than a transaction
with JSC or its Affiliates or as contemplated by this Agreement). For
purposes of Section 8.03, the term "beneficial owner" shall be defined by
reference to Section 13(d) of the Exchange Act.
(d) If this Agreement is terminated by Stone pursuant to Section
8.01(e), 8.01(f), 8.01(g) or 8.01(m)(i) or by JSC pursuant to Section 8.01(g),
JSC shall pay to Stone a termination fee of $60 million in cash within one
business day after such termination.
(e) If this Agreement is terminated by either Stone or JSC
pursuant to Section 8.01(d)(ii) and a Takeover Proposal with respect to JSC
shall have been made prior to the JSC Stockholders' Meeting, JSC shall pay to
Stone a termination fee of $60 million in cash within one business day after
such termination; provided that if the Board of Directors of JSC did not
exercise any of its rights under Section 6.01 (other than a recommendation of
rejection of a Takeover Proposal pursuant to Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act) with respect to the Takeover Proposal,
such fee shall not be payable unless concurrently with or within 9 months
after such termination, a JSC Third Party Acquisition Event occurs. In such
event, JSC shall pay Stone the termination fee of $60 million in cash within
one business day of the occurrence of the JSC Third Party Acquisition Event.
A "JSC Third Party Acquisition Event" means any of the following
events: (A) any Person (other than Stone or its Affiliates) acquires or becomes
the beneficial owner of a majority of the outstanding shares of JSC Common
Stock; or (B) the consummation of a merger or other business combination
involving JSC or the completion of the acquisition of a majority interest in,
or a majority of the assets of, JSC (other than a transaction with Stone or its
Affiliates or as contemplated by this Agreement).
(f) If one party fails to promptly pay to the other any fee or
expense due hereunder, the defaulting party shall pay the costs and expenses
(including legal fees and expenses) in connection with any action, including
the filing of any lawsuit or other legal action, taken to collect payment,
together with interest on the amount of any unpaid fee at the publicly
announced prime rate of Citibank, N.A. from the date such fee was required to
be paid.
Section 8.4. Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Stone or JSC, but, after any
such approval, no amendment shall be made which by law requires further
approval by such stockholders without such further approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
Section 8.5. Extension; Waiver. At any time prior to the
Effective Time, the parties hereto may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto contained herein, (ii) waive any inaccuracies in the
representations and warranties of the other parties hereto contained herein or
in any document delivered pursuant hereto and (iii) waive compliance with any
of the agreements or conditions of the other parties hereto contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party.
ARTICLE 9
Miscellaneous
Section 9.1. Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and agreements
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time, except for covenants and agreements which,
by their terms, are to be performed after the Effective Time. Except as
otherwise provided in Section 6.17, the Confidentiality Agreement shall
survive the execution and delivery of this Agreement but shall terminate and
be of no further force and effect as of the Effective Time.
Section 9.2. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to JSC or Sub, to
Jefferson Smurfit Corporation
Jefferson Smurfit Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President and Chief Financial Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Stone, to:
Stone Container Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sidley & Austin
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.3. Interpretation. When a reference is made in this
Agreement to a section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is to
be made available. The phrase "to the knowledge of" a party shall mean the
actual knowledge of any of the executive officers of such party after due
inquiry of those employees of the party who could reasonably be expected to
have information relating to the subject matter of the representation.
Section 9.4. Disclosure Schedules. Each exception to a
section of this Agreement set forth in the JSC Disclosure Schedule or the Stone
Disclosure Schedule will specifically refer to the section of the Agreement to
which it relates.
Section 9.5. Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 9.6. Entire Agreement; No Third Party Beneficiaries.
This Agreement (including the documents and the instruments referred to
herein) (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) except as provided in Sections
1.04 and 6.12 and this Section 9.06, is not intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder. For purposes
of Section 7.01(f), the condition contained therein may not be waived, and
this provision may not be amended, by JSC and Stone without the express
written consent of JSG and MSLEF who are hereby expressly made third party
beneficiaries of this provision.
Section 9.7. Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware without
regard to any applicable conflicts of law rules. Each party hereto
irrevocably and unconditionally consents and submits to the jurisdiction of
the courts of the State of Delaware and of the United States of America
located in the State of Delaware for any actions, suits or proceedings arising
out of or relating to this Agreement and the transactions contemplated hereby,
and further agrees that service of any process, summons, notice or document by
U.S. registered or certified mail to the party at the address specified in
Section 9.02, shall be effective service of process for any action, suit or
proceeding brought against such party in any such court. Each party hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this agreement or the
transactions contemplated hereby, in the courts of the State of Delaware
located in Wilmington, Delaware or the United States of America located in
Wilmington, Delaware, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be modified rather than voided, if
possible, in order to achieve the intent of the parties to the extent
possible. In any event, all other provisions of this Agreement shall be
deemed valid and enforceable to the extent possible.
Section 9.8. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, and any attempted assignment thereof
without such consent shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
IN WITNESS WHEREOF, JSC, Sub and Stone have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
JEFFERSON SMURFIT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Chief
Financial Officer
JSC ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Chief
Financial Officer
STONE CONTAINER CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
EXHIBIT A
May 10, 1998
Stone Container Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that Jefferson Smurfit Corporation
("JSC") and Stone Container Corporation ("Stone") are entering into an
Agreement and Plan of Merger dated as of May 10, 1998 (the "Merger
Agreement"), providing for, among other things, a merger between Stone and a
wholly owned subsidiary of JSC (the "Merger"), in which all of the outstanding
shares of common stock, par value $0.01 per share, of Stone (the "Stone Common
Stock") will be exchanged for shares of common stock, par value $0.01 per
share, of JSC (the "JSC Common Stock").
The undersigned is a stockholder of JSC and is entering into
this letter agreement to induce you to enter into the Merger Agreement and to
consummate the transactions contemplated by the Merger Agreement.
The undersigned confirms its agreement with you as follows:
1. The undersigned represents, warrants and agrees that
Schedule I annexed hereto sets forth the number of shares of JSC Common
Stock (the "Shares") of which the undersigned or its subsidiaries is the
record or beneficial owner as of the date hereof and that, as of the date
hereof, the undersigned owns such Shares free and clear of all liens,
charges, encumbrances, voting agreements and commitments of every kind
("Liens"), other than Liens under the Stockholders' Agreement dated as of
May 3, 1994, as amended, among Smurfit International B.V., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Leveraged Equity Fund II, Inc. ("MSLEF"), JSC and the other parties listed
on the signature pages thereto, and the Voting Agreement dated as of May
10, 1998 among Smurfit International B.V., MSLEF and ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇.
If, after the date hereof, the undersigned acquires beneficial ownership of
any shares of JSC Common Stock (any such shares, "Additional Shares"), the
provisions of this Agreement shall be applicable to such Additional Shares
as if such Additional Shares had been Shares as of the date hereof.
2. The undersigned agrees that, prior to the Merger, it
will not, and it will not permit its subsidiaries to, contract to sell,
sell or otherwise transfer or dispose of any of the Shares, or any interest
therein, or securities convertible thereinto or any voting rights with
respect thereto, other than to a subsidiary of the undersigned or with your
prior written consent.
3. Without limiting the scope or effect of paragraph (1) or
(2) hereof, the undersigned agrees to vote or cause to be voted in favor of
the issuance of shares of JSC Common Stock in the Merger and the amendments
to the JSC certificate of incorporation contemplated by the Merger
Agreement all Shares beneficially owned by it or its subsidiaries on the
record date for the JSC Stockholders' Meeting (as defined in the Merger
Agreement).
4. If the Board of Directors of JSC shall not have
recommended the issuance of shares of JSC Common Stock in the Merger and
the amendments to the JSC certificate of incorporation contemplated by the
Merger Agreement or shall have modified in a manner materially adverse to
Stone, or shall have withdrawn, its recommendation in favor of the issuance
of shares of JSC Common Stock in the Merger and the amendments to the JSC
certificate of incorporation contemplated by the Merger Agreement, the
obligations of the undersigned under paragraphs (2) and (3) shall be
suspended.
The undersigned has all necessary power and authority to enter
into this letter agreement. This agreement is the legal, valid and binding
agreement of the undersigned, and is enforceable against the undersigned in
accordance with its terms.
This letter agreement shall terminate, without further
liability or obligation of the undersigned, including liability for damages,
upon the earlier of the (i) termination of the Merger Agreement in accordance
with its terms and (ii) consummation of the Merger; provided that such
termination shall not relieve the undersigned from liability for breach of
this Agreement.
This letter agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflict of law rules.
Nothing herein shall be construed to require the undersigned,
or any company, trust or other entity controlled by the undersigned, to take
any action or fail to take any action in violation of applicable law, rule or
regulation.
Very truly yours,
SMURFIT INTERNATIONAL B.V.
By: /s/ Houghton Fry
----------------------------------
Name: Houghton Fry
Title: Attorney-in-Fact
Confirmed as of the date
first above written:
STONE CONTAINER CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
SCHEDULE I
Aggregate Number of Shares Owned by Smurfit International B.V.
--------------------------------------------------------------
and its Subsidiaries
--------------------
51,638,462 Shares
EXHIBIT B
May 10, 1998
Stone Container Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that Jefferson Smurfit Corporation ("JSC")
and Stone Container Corporation ("Stone") are entering into an Agreement and
Plan of Merger dated as of May 10, 1998 (the "Merger Agreement"), providing for,
among other things, a merger between Stone and a wholly owned subsidiary of JSC
(the "Merger"), in which all of the outstanding shares of common stock, par
value $0.01 per share, of Stone (the "Stone Common Stock") will be exchanged for
shares of common stock, par value $0.01 per share, of JSC (the "JSC Common
Stock").
The undersigned is a stockholder of JSC and is entering into this
letter agreement to induce you to enter into the Merger Agreement and to
consummate the transactions contemplated by the Merger Agreement.
The undersigned confirms its agreement with you as follows:
1. The undersigned represents, warrants and agrees that Schedule I
annexed hereto sets forth the number of shares of JSC Common Stock (the
"Shares") of which the undersigned is the record or beneficial owner as of the
date hereof and that, as of the date hereof, the undersigned owns them free and
clear of all liens, charges, encumbrances, voting agreements and commitments of
every kind ("Liens"), other than Liens under the Stockholders' Agreement dated
as of May 3, 1994, as amended, among Smurfit International B.V., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Leveraged Equity Fund II, Inc. ("MSLEF"), JSC and the other parties listed on
the signature pages thereto, the related Registration Rights Agreement dated the
same date, the Voting Agreement dated as of May 10, 1998 among Smurfit
International B.V., MSLEF and ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇ and the Stock Purchase
Agreement dated as of May 10, 1998 among Smurfit International B.V., Jefferson
Smurfit Group plc, MSLEF and certain other shareholders of JSC. If, after the
date hereof, the undersigned acquires beneficial ownership of any additional
shares of JSC Common Stock (any such shares, "Additional Shares"), the
provisions of this Agreement shall be applicable to such Additional Shares as if
such Additional Shares had been Shares as of the date hereof.
2. Without limiting the scope or effect of paragraph (1) hereof, the
undersigned agrees to vote or cause to be voted in favor of the issuance of
shares of JSC Common Stock in the Merger and the amendments to the JSC
certificate of incorporation contemplated by the Merger Agreement all Shares
beneficially owned by the undersigned on the record date for the JSC
Stockholders' Meeting (as defined in the Merger Agreement).
3. If the Board of Directors of JSC shall not have recommended the
issuance of shares of JSC Common Stock in the Merger and the amendments to the
JSC certificate of incorporation contemplated by the Merger Agreement or shall
have modified in a manner materially adverse to Stone, or shall have withdrawn,
its recommendation in favor of the issuance of shares of JSC Common Stock in the
Merger and the amendments to the JSC certificate of incorporation contemplated
by the Merger Agreement, the obligation of the undersigned under paragraph (2)
shall be suspended.
The undersigned has all necessary power and authority to enter into
this letter agreement. This agreement is the legal, valid and binding agreement
of the undersigned, and is enforceable against the undersigned in accordance
with its terms.
This letter agreement shall terminate, without further liability or
obligation of the undersigned, including liability for damages, upon the earlier
of the (i) termination of the Merger Agreement in accordance with its terms and
(ii) consummation of the Merger; provided that such termination shall not
relieve the undersigned from liability for breach of this Agreement.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to any applicable conflict
of law rules.
Nothing herein shall be construed to require the undersigned, or any
company, trust or other entity controlled by the undersigned, to take any action
or fail to take any action in violation of applicable law, rule or regulation.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LEVERAGED
EQUITY FUND II, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice Chairman
Confirmed as of the date first above written:
STONE CONTAINER CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
SCHEDULE I
Aggregate MSLEF Interests
-------------------------
31,574,540 Shares*
--------
* Subject to decrease to the extent Shares (other than Shares to be
sold to SIBV or its Affiliates) are sold or distributed prior to the record
date.
I-1
EXHIBIT C
May 10, 1998
Jefferson Smurfit Corporation
Jefferson Smurfit Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that Jefferson Smurfit Corporation
("JSC") and Stone Container Corporation ("Stone") are entering into an
Agreement and Plan of Merger dated as of May 10, 1998 (the "Merger
Agreement"), providing for, among other things, a merger between Stone and a
wholly owned subsidiary of JSC (the "Merger"), in which all of the outstanding
shares of common stock, par value $0.01 per share, of Stone (the "Stone Common
Stock") will be exchanged for shares of common stock, par value $0.01 per
share, of JSC (the "JSC Common Stock").
The undersigned is a stockholder of Stone and is entering into
this letter agreement to induce you to enter into the Merger Agreement and to
consummate the transactions contemplated by the Merger Agreement.
The undersigned confirms its agreement with you as follows:
1. The undersigned represents, warrants and agrees that
Schedule I annexed hereto sets forth the number of shares of Stone Common
Stock (the "Shares") of which the undersigned is the record or beneficial
owner as of the date hereof and that, as of the date hereof, the
undersigned owns such Shares free and clear of all liens, charges,
encumbrances, voting agreements and commitments of every kind ("Liens"),
other than Liens under the Voting Agreement dated as of May 10, 1998 among
Smurfit International B.V., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged Equity Fund II, Inc.
and ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇. If, after the date hereof, the undersigned
acquires beneficial ownership of any shares of Stone Common Stock (any such
shares, "Additional Shares"), the provisions of this Agreement shall be
applicable to such Additional Shares as if such Additional Shares had been
Shares as of the date hereof.
2. The undersigned agrees that, prior to the Merger, he
will not contract to sell, sell or otherwise transfer or dispose of those
of his Shares as to which he has power of disposition or to direct
disposition, or any interest therein, or securities convertible thereinto
or any voting rights with respect thereto, other than (a) pursuant to the
Merger, (b) the transfer of up to 100,000 Shares to a charitable foundation
or (c) with your prior written consent. The undersigned also agrees to use
reasonable best efforts to persuade members of his family to vote in favor
of approval and adoption of the Merger and the Merger Agreement and the
amendments to the Stone certificate of incorporation contemplated by the
Merger Agreement.
3. Without limiting the scope or effect of paragraph (1) or
(2) hereof, the undersigned agrees to vote (or cause to be voted) those
Shares that are beneficially owned by the undersigned on the record date
and as to which he has the power to vote or to direct the vote at the Stone
Stockholders' Meeting (as defined in the Merger Agreement) in favor of
approval and adoption of the Merger and the Merger Agreement and the
amendments to the Stone certificate of incorporation contemplated by the
Merger Agreement.
4. If the Board of Directors of Stone shall not have
recommended the approval and adoption of the Merger and the Merger
Agreement and the amendments to the Stone certificate of incorporation
contemplated by the Merger Agreement or shall have modified in a manner
materially adverse to JSC, or shall have withdrawn, its recommendation in
favor of approval and adoption of the Merger and the Merger Agreement and
the amendments to the Stone certificate of incorporation contemplated by
the Merger Agreement, the obligations of the undersigned under paragraphs
(2) and (3) shall be suspended.
The undersigned has all necessary power and authority to enter
into this letter agreement. This agreement is the legal, valid and binding
agreement of the undersigned, and is enforceable against the undersigned in
accordance with its terms.
This letter agreement shall terminate, without further
liability or obligation of the undersigned, including liability for damages,
upon the earlier of the (i) termination of the Merger Agreement in accordance
with its terms and (ii) consummation of the Merger; provided that, in the case
of a termination pursuant to Section 8.01(d)(i) of the Merger Agreement, such
termination shall not relieve the undersigned from liability for breach of
this Agreement.
Nothing herein shall be construed to require the undersigned,
or any company, trust or other entity controlled by the undersigned, to take
any action or fail to take any action in violation of applicable law, rule or
regulation or that the undersigned in good faith reasonably believes would be
a violation of the undersigned's fiduciary duties.
Please confirm that the foregoing correctly states the
understanding between us by signing and returning to me a counterpart hereof.
This letter agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflict of law rules.
Very truly yours,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
Confirmed as of the date
first above written:
JEFFERSON SMURFIT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and General Counsel
SCHEDULE I
Shares Owned by ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
1,183,203
EXHIBIT D-1
STONE CHARTER AMENDMENTS
Amendments to the Restated Certificate of Incorporation to provide that the
holders of shares of Stone Series E Preferred Stock shall be entitled, in
addition to existing voting rights, to vote upon all matters upon which
holders of the Stone Common Stock have the right to vote and shall be entitled
to one vote per share of Stone Series E Preferred Stock (except that in the
case of the elections of directors (other than the election of directors
provided for in Section 4(b) of Subpart I.B. of the Restated Certificate of
Incorporation), holders of shares of the Stone Series E Preferred Stock shall
have the same cumulative voting rights as holders of Stone Common Stock in
accordance with Subpart II.C. of the Restated Certificate of Incorporation,
with the holders of the Stone Series E Preferred Stock and the Stone Common
Stock voting together as one class on any such matters).
EXHIBIT D-2
Amendments to the Restated Certificate of Incorporation to comply with certain
requirements contained in Section 6 of Subpart I.B. of the Restated
Certificate of Incorporation.
EXHIBIT E-1
Amendments to Certificate of Incorporation
The JSC certificate of incorporation shall be amended as of the
Effective Time so that:
o The name of the corporation shall be changed from "Jefferson
Smurfit Corporation" to "Smurfit-Stone Container Corporation".
o The total number of shares of capital stock which JSC shall
have the authority to issue is 425,000,000 shares, consisting of 400,000,000
shares of JSC Common Stock and 25,000,000 shares of JSC Preferred Stock.
o The Board of Directors of JSC shall no longer be divided into
three classes. The entire Board of Directors shall be elected annually.
o Holders of shares of JSC capital stock representing 25% of
the votes represented by all JSC capital stock will have the right to call
special meetings of stockholders.
o JSC shall be required, following the Merger, to make
available to Stone Container Corporation ("Stone") shares of JSC Common Stock
or Rights (if applicable) that are required, pursuant to the terms of Stone's
Series E Preferred Stock, to be delivered to Stone no earlier than when
required to be delivered by Stone to the holder.
o Any amendment by the stockholders of the Bylaw provisions
referred to in Exhibit E-2-I shall require the approval of holders of 75% of
the outstanding shares of JSC Common Stock.
EXHIBIT E-2
GOVERNANCE MATTERS
I. BYLAW AMENDMENTS
A. Generally
1. None of the provisions set forth in this Exhibit E-2-I,
including this provision, may be amended by the Board of Directors without the
approval of 75% of the entire Board of Directors. None of the provisions set
forth in this Exhibit E-2-I relating to the scope of the Compensation
Committee's duties, the right of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged Equity Fund II, Inc.
("MSLEF") to designate a member to the Board of Directors and MSLEF's right to
representation on the Compensation Committee and to have its representative
serve as Chairman of such Committee and MSLEF's other rights hereunder,
including this subprovision of this provision, may be amended without the
approval of the MSLEF Designee and each such provision shall survive until the
date when MSLEF's ownership of JSC Common Stock decreases below the levels
specified in I.B.5.
2. The provisions set forth in this Exhibit E-2 shall survive
until ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇ ceases to be Chief Executive Officer or upon his 66th
birthday, if earlier, and shall thereafter be of no force or effect; provided
that the provisions set forth in the third sentence of Section E.2 shall
survive until the Annual Meeting referenced therein and the effectiveness of
I.C.4. shall terminate on the fifth anniversary of the Effective Time.
3. "Cause" shall mean an officer's or director's (x) willful and
continued failure to substantially perform his duties with JSC in his
established position, (y) willful conduct which is significantly injurious to
JSC, monetarily or otherwise, or (z) conviction for, or guilty plea to, a
felony.
B. Board of Directors; Officers
1. The Board of Directors shall consist of 12 members. A director
shall be required to retire no later than the Annual Meeting immediately
following his 72nd birthday.
2. Each of the persons who serves as Chairman, CEO and Executive
Vice President-Deputy Chief Executive will be a member of the Board of
Directors.
3. In addition to the Chairman, CEO and Executive Vice
President-Deputy Chief Executive, the Board of Directors will include four
members designated by Smurfit International B.V. ("SIBV") which, in the case of
individuals other than the initial designees, will be determined in accordance
with paragraph 7 below (the "JSC Designees"), four members designated by Stone
which, in the case of individuals other than the initial designees, will be
determined in accordance with paragraph 8 below (the "Stone Designees") and
one member designated by MSLEF which, in the case of an individual other than
the initial designee, will be determined in accordance with paragraph 9 (the
"MSLEF Designee").
4. At least two of the JSC Designees and two of the Stone
Designees must be "independent" directors (each such person, an "Independent
Director"). For purposes of the foregoing, an Independent Director will be an
individual who, in accordance with Rule 303.00 of the NYSE, would be eligible
for membership on an Audit Committee of a corporation listed on the NYSE and
who is not (i) an officer or employee of, or consultant or professional
advisor (or employee, officer or partner of an entity that is such) to, JSC or
any of its subsidiaries, (ii) a beneficial owner of more than 15% of the
outstanding shares of JSC or (iii) an officer or employee of, or consultant
or professional advisor (or employee, officer or partner of an entity that is
such) to, any such beneficial owner; provided that any current director of JSC
who, pursuant to JSC's current policy regarding independent directors, is an
independent director of JSC, will qualify as an Independent Director so long as
such director satisfies such current policy.
5. If at any time MSLEF's ownership of JSC Common Stock decreases
below 1,000,000 shares of JSC Common Stock (determined on a primary basis and
adjusted as appropriate for stock splits, etc.), MSLEF will no longer have a
right to designate one member to the Board of Directors. At the time that
MSLEF ceases to have the right to designate a member to the Board of
Directors, the Board of Directors will nominate and elect a replacement for
the MSLEF Designee and the requirement for approval by a MSLEF Designee of
amendment to Exhibit E-2-I matters shall cease.
6. Subject to the fiduciary duties of the directors, the Board of
Directors will nominate for election at each stockholders' meeting at which
directors are to be elected, the then-current Stone Designees, JSC Designees
and MSLEF Designee, if any, or their replacements, together with the Chairman,
Chief Executive Officer and Executive Vice President-Deputy Chief Executive.
7. If the Chairman or the Executive Vice President-Deputy Chief
Executive or a JSC Designee is removed with Cause or resigns, dies or
otherwise cannot continue to serve as a member of the Board of Directors, SIBV
will select a replacement, and the other members of the Board of Directors,
subject to their fiduciary duties, will vote to fill the vacancy with the
person selected by SIBV; provided that if the ownership by Jefferson Smurfit
Group plc ("JSG") and its subsidiaries of JSC Common Stock falls below 15%,
and thereafter a JSC Designee is removed with Cause or resigns, dies or
otherwise cannot continue to serve as a member of the Board of Directors, the
remaining JSC Designees will select a replacement (such selection to be
evidenced by a vote of a majority of such remaining designees), and the other
members of the Board of Directors, subject to their fiduciary duties, will
vote to fill the vacancy with the person selected by the remaining JSC
Designees; and provided further that if the ownership by JSG and its
subsidiaries of JSC Common Stock falls below 15%, and thereafter the Chairman
or the Executive Vice President-Deputy Chief Executive is removed or resigns,
dies or otherwise cannot continue to serve as Chairman or Executive Vice
President-Deputy Chief Executive, as the case may be, the Board of Directors
may, by majority vote, fill such position. If the Board of Directors in the
exercise of its fiduciary duties does not fill the vacancy with the person
selected by SIBV or the remaining JSC Designees, as the case may be, SIBV or
the remaining JSC Designees, as the case may be, will select another
replacement.
8. If a Stone Designee is removed with Cause or resigns, dies or
otherwise cannot continue to serve as a member of the Board of Directors, the
remaining Stone Designees and the CEO will select a replacement (such
selection to be evidenced by a vote of a majority of such remaining Stone
Designees and the CEO), and the other members of the Board of Directors,
subject to their fiduciary duties, will vote to fill the vacancy with the
person selected by the remaining Stone Designees and the CEO. If the Board of
Directors in the exercise of its fiduciary duties does not fill the vacancy
with the person selected by the remaining Stone Designees and the CEO, the
remaining Stone Designees and the CEO will select another replacement.
9. If the MSLEF Designee is removed with Cause or resigns,
dies or otherwise cannot continue to serve as a member of the Board of
Directors, MSLEF will select a replacement, and the other members of the
Board of Directors, subject to their fiduciary duties, will vote to fill
the vacancy with the person selected by MSLEF. If the Board of Directors
in the exercise of its fiduciary duties does not fill the vacancy with the
person selected by MSLEF, MSLEF will select another replacement.
10. Members of the Board of Directors (which, in the case of the
Chief Executive Officer and Executive Vice President-Deputy Chief Executive,
shall include such individuals both in their capacity as directors and
officers) may be removed only with Cause as determined by a vote of 75% of all
other members of the Board of Directors.
11. The following actions shall require the approval of 75% of the
members of the entire Board of Directors:
o a change in the tenure of ▇▇. ▇▇▇▇▇, which, in the case of
shortening, shall only be for Cause;
o any change in the title or any material diminution in the
responsibilities of the Chairman, the Chief Executive Officer or
the Executive Vice President-Deputy Chief Executive; and
o stock repurchases that would result in the ownership by JSG and
its subsidiaries of JSC capital stock representing more than 40%
of the voting power represented by all outstanding JSC capital
stock.
12. The following actions shall require the approval of a majority
of the Independent Committee (as defined in I.C.4. below):
o any commercial or other transactions (including, without
limitation, any squeeze-out of other stockholders effected by
merger, reverse stock split or otherwise) and agreements between
JSC and its subsidiaries, on the one hand, and JSG and its
subsidiaries (other than JSC and its subsidiaries), on the other
hand, other than (x) transactions pursuant to the current terms of
agreements currently in effect or entered into in connection with
the Merger Agreement or replacement agreements (so long as the
terms of such replacement agreements are not materially less
favorable to JSC), (y) any individual sale of assets involving a
net book value or purchase price of less than $500,000 (provided
that the aggregate amount of all such sales within any 12-month
period shall not exceed $5,000,000), or (z) product sales in the
ordinary course of business effected on arm's-length equivalent
terms and not otherwise requiring Board approval; and
o resolution of disputes between the CEO and the Chairman in
relation to any matter to be decided between them pursuant to this
Exhibit E-2.
13. The presence of a majority of the Board of Directors at any
meeting of the Board of Directors shall constitute a quorum.
C. Board Committees
1. JSC's Board of Directors shall have three committees: the
Compensation Committee, the Audit Committee and the Independent Committee.
2. The Compensation Committee shall perform functions customary
for the compensation committee of a public company. In this regard, the
Compensation Committee shall determine the compensation payable to all
executive officers, approve the adoption of all employee benefit plans
(including, without limitation, equity-based plans) and make all decisions with
respect to grants or awards under such plans. The Compensation Committee will
be chaired by the MSLEF Designee (unless there is no MSLEF Designee, in which
case such member as is designated by the Board of Directors (which designation
shall require approval of 75% of the members of the entire Board of
Directors)) and will be comprised of the MSLEF Designee (so long as there is
such a Designee) and 2 Independent Directors (1 of whom shall be a Stone
Designee selected by the Stone Designees and the CEO and 1 of whom shall be a
JSC Designee selected by the JSC Designees).
3. The Audit Committee shall perform functions customary for the
audit committee of a public company and shall be comprised exclusively of the
Independent Directors.
4. The Independent Committee shall consider the matters set forth
under B.12. and will be comprised of 2 Stone Designees (who shall be selected
from among the Stone Designees by the Stone Designees and the CEO) who are
Independent Directors, 2 JSC Designees (who shall be selected from among the
JSC Designees by the JSC Designees) who are Independent Directors and the
MSLEF Designee (so long as there is such a Designee); provided that following
the termination or effectiveness of the provisions of E-2 pursuant to A.2.,
the Independent Committee shall consist of Independent Directors (with any
designee of MSLEF constituting an Independent Director solely for this purpose
so long as such designee is not an officer or employee of JSC or a director,
officer or employee of any beneficial owner of 15% or more of JSC Common
Stock) designated by a majority of the entire Board of Directors.
5. Subject to the second sentence of I.A.1., changes by the Board
of Directors in the scope, composition and chairman of committees shall require
the approval of 75% of the members of the entire Board of Directors.
D. Additional Committees
1. The Board of Directors will create two non-Board committees:
the Cost Reduction/Divestiture Committee and the Management Operating
Committee.
2. The Cost Reduction/Divestiture Committee will have
responsibility for the development and implementation of a plan that is
designed to achieve asset divestitures over a period of time determined by the
Committee of not less than $2.50 billion of assets and the development of a
program of cost reductions and other synergies. The Cost
Reduction/Divestiture Committee will be comprised of the Chairman, the Chief
Executive Officer, the Executive Vice President-Deputy Chief Executive (who
shall be Chairman of the Committee) and the Chief Financial Officer.
3. The Management Operating Committee will be responsible for
setting and implementing policies and objectives of JSC and reviewing
performance and the achievement of policies and objectives. The Management
Operating Committee will be comprised of the Chairman, the Chief Executive
Officer, the Executive Vice President-Deputy Chief Executive, the Chief
Financial Officer and certain other executives designated by the Chief
Executive Officer subject to the review and approval by the Chairman. There
shall be no Chairman of the Committee.
4. Changes in the scope, composition and chairman of such
Committees shall require the approval of 75% of the members of the entire
Board of Directors.
E. Additional Matters; Description of Responsibilities
1. The Chairman shall serve as non-executive Chairman of the Board
of Directors and shall have general supervisory responsibilities with respect
to the business affairs and officers of JSC.
2. The Chief Executive Officer shall be the officer principally
responsible for the day-to-day operations of JSC and shall have general
supervisory responsibilities with respect to the business affairs and officers
of JSC. The Chief Executive Officer shall report directly to the Board of
Directors. In addition to the provisions set forth above, ▇▇. ▇▇▇▇▇'▇ term as
CEO will cease upon the Annual Meeting immediately following achievement of
his 66th birthday.
3. The Executive Vice President-Deputy Chief Executive shall be
the officer principally responsible for development of JSC's cost reduction and
divestiture program, implementation of the divestiture program and, in
consultation with the CEO, implementation of the cost reduction program. He
shall also have the operating responsibilities of the Chief Executive Officer
in the absence or disability of the Chief Executive Officer, and such other
operating responsibilities as may be determined by the Board of Directors not
inconsistent with the responsibilities of the Chief Executive Officer as
provided herein.
4. The Chief Financial Officer shall perform functions customary
for chief financial officers of public corporations and shall report to the
CEO. Termination of the employment, or any material diminution in the
responsibilities, of the CFO shall require approval by a majority of the Board
of Directors.
5. Except as otherwise provided herein, the appointment or
termination of executive officers (including the creation of additional
executive officer positions) shall be made or effected by the Chief Executive
Officer subject to review and approval by the Chairman.
6. The Bylaws shall provide that in the event that the
Disinterested Directors referred to in Section 4.09(b) of the Standstill
Agreement authorize the action described therein, such authorization shall
constitute authorization by the entire Board of Directors of JSC.
II. ADDITIONAL GOVERNANCE MATTERS
A. SIBV, MSLEF and ▇▇. ▇▇▇▇▇ will vote all shares of JSC Common Stock
held by them or their subsidiaries in support of each other's Board
Designees in accordance with the Voting Agreement.
B. Prior to the mailing of the Proxy Statement, each of SIBV, Stone and
MSLEF will designate the individuals who will become members of the Board
of Directors upon consummation of the Merger.
C. The initial Chairman shall be Dr. ▇▇▇▇▇▇▇ ▇. ▇. Smurfit.
D. The initial Chief Executive Officer shall be ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇.
E. The initial Executive Vice President-Deputy Chief Executive shall be
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
F. The initial Chief Financial Officer shall be ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LEVERAGED EQUITY FUND II, INC.,
SMURFIT INTERNATIONAL B.V.,
JEFFERSON SMURFIT CORPORATION
and
THE OTHER PARTIES IDENTIFIED
ON THE SIGNATURE PAGES HERETO
Dated as of May 10, 1998
TABLE OF CONTENTS
--------------
Page
----
Section 1. Effectiveness and Certain Definitions......................1
Section 2. Demand Registration........................................5
Section 3. Company Registration.......................................9
Section 4. Piggyback Registration....................................10
Section 5. Expenses..................................................12
Section 6. Registration and Qualification............................12
Section 7. Termination...............................................15
Section 8. Underwriting; Due Diligence, Etc..........................15
Section 9. Restrictions on Public Sale; Inconsistent Agreements......16
Section 10. Indemnification and Contribution..........................17
Section 11. Rule 144..................................................21
Section 12. Miscellaneous.............................................21
Section 13. Representations and Warranties............................25
Section 14. Ireland Listing...........................................28
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of May 10, 1998 (this
"Agreement") among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LEVERAGED EQUITY FUND II, INC., a Delaware
corporation ("MSLEF II"), SMURFIT INTERNATIONAL B.V., a corporation organized
under the laws of The Netherlands ("SIBV"), JEFFERSON SMURFIT CORPORATION, a
Delaware corporation (the "Company"), and the other parties identified on the
signature pages hereto.
WHEREAS, the Company, Stone Container Corporation, a Delaware
corporation ("Stone"), and JSC Acquisition Corporation, a Delaware corporation
and a wholly owned subsidiary of the Company ("Sub"), have entered into a Merger
Agreement (the "Merger Agreement") dated as of the date hereof pursuant to
which, subject to the terms and conditions specified therein, Sub will merge
with and into Stone (the "Merger"); and
WHEREAS, as a condition and inducement to the willingness of
SIBV, MSLEF II and certain of their respective Affiliates to support the Merger
by agreeing to approve the issuance of the Common Stock (as defined below)
necessary to consummate the Merger and certain amendments to the Company's
certificate of incorporation as contemplated by the Merger Agreement, the
Company has agreed to grant MSLEF II and such related parties the registration
rights described herein.
NOW, THEREFORE, upon the premises and the mutual promises herein
contained, and for good and valuable consideration, the receipt and adequacy of
which is acknowledged, the parties agree as follows:
Section 1. Effectiveness and Certain Definitions. (a) The
parties hereto hereby agree that, effective as of the closing of the Merger, the
Registration Rights Agreement dated as of May 3, 1994 shall terminate and the
parties hereto agree that, at such time, this Agreement, other than this Section
1(a) (which shall be effective as of the execution of this Agreement), shall
become effective.
(b) As used in this Agreement the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended. In the case of any Person which is a trust established under
an employee benefit plan subject to the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time, an "Affiliate" of such
Person shall include any trust (under a plan maintained by the same employer as
such plan) that is a successor to the assets held by such trust or any other
trust established directly or indirectly under such plan or any other such plan
maintained by the same employer.
"Common Stock" shall mean the common stock, par value $0.01 per
share, of the Company, any stock or other securities into which or for which
such stock may hereafter be changed, converted, exercised or exchanged, and any
other securities issued to holders of such stock (or such securities into which
or for which such shares are so changed, converted or exchanged) upon any
reclassification, recapitalization, share combination, share subdivision, share
dividend, merger, consolidation or similar transaction or event.
"Effective Date" means, with respect to any registration
statement, the date of the effectiveness thereof under the Securities Act
(without regard to any post-effective amendments to such registration
statement).
"Equity Investors" shall mean SIBV/MS Equity Investors, L.P., a
Delaware limited partnership.
"Equity Investors Inc." shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Equity
Investors Inc., a Delaware corporation and the general partner of Equity
Investors.
"▇▇▇▇▇▇ Holders" shall mean (i) MSLEF II, (ii) Equity Investors,
(iii) The MSLEF II Fund, (iv) Equity Investors Inc., (v) First Plaza Group Trust
("First Plaza"), (vi) Leeway & Co. ("Leeway"), (vii) MSLEF and (viii) any Person
which has purchased, in one transaction or a series of related transactions, at
least 2% of the outstanding Common Stock from a ▇▇▇▇▇▇ ▇▇▇▇▇▇ and which has
agreed, with the consent of MSLEF II and in form and substance reasonably
satisfactory to the Company and SIBV, to be bound as a ▇▇▇▇▇▇ ▇▇▇▇▇▇ and to have
the rights and obligations of a ▇▇▇▇▇▇ ▇▇▇▇▇▇ for purposes of this Agreement
(each such Person, a "Block Purchaser" and the shares of Common Stock so
purchased, "Block Purchaser Shares").
"MSLEF" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged Equity Holdings,
Inc., a Delaware corporation.
"MSLEF II" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged Equity Fund II,
Inc., a Delaware corporation and the general partner of The MSLEF II Fund.
"Person" means an individual, a corporation, a partnership, a
joint venture, a trust or unincorporated organization, a joint stock company or
other similar organization or any other legal entity.
"Registrable Securities" means the Common Stock; provided that
any such securities shall cease to be Registrable Securities with respect to a
proposed offer or sale thereof (i) when a registration statement with respect to
the sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with the plan of
distribution set forth in such registration statement or (ii) such securities
shall have been disposed of in accordance with Rule 144 or in a private
placement other than to a Block Purchaser; provided, further, Registrable
Securities in respect of any Person shall not include Common Stock acquired by
such Person after the date hereof (other than (i) shares of Common Stock
acquired as a result of a reclassification, recapitalization, share combination,
share subdivision, share dividend or similar event, (ii) shares acquired by a
▇▇▇▇▇▇ ▇▇▇▇▇▇ from another ▇▇▇▇▇▇ ▇▇▇▇▇▇ or by an SIBV Holder from a ▇▇▇▇▇▇
▇▇▇▇▇▇ and (iii) Block Purchaser Shares).
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with its registration obligations set
forth in this Agreement including, without limitation, the following: (i) the
fees, disbursements and expenses of the Company's counsel(s) (United States and
foreign) and accountants in connection with the registration of the Registrable
Securities to be disposed of under the Securities Act; (ii) the reasonable fees
and disbursements of (1) one counsel (other than counsel to the Company)
retained by the ▇▇▇▇▇▇ Holders in connection with each such registration in
which a ▇▇▇▇▇▇ ▇▇▇▇▇▇ intends to participate hereunder and (2) one Irish and one
United States counsel (other than counsel to the Company) retained by the SIBV
Holders in connection with each such registration in which an SIBV Holder
intends to and is permitted to participate hereunder; (iii) all expenses in
connection with the preparation, printing and filing of the registration
statement, any preliminary prospectus or final prospectus, any other offering
documents and amendments and supplements thereto and the mailing and delivering
of copies thereof to any underwriters and dealers; (iv) the cost of printing or
producing any agreement(s) among underwriters, underwriting agreement(s), and
blue sky or legal investment memoranda, any selling agreements and any other
documents in connection with the offering, sale or delivery of the Registrable
Securities to be disposed of; (v) all expenses in connection with the
qualification of the Registrable Securities to be disposed of for offering and
sale under state securities laws, including the reasonable fees and
disbursements of counsel for the underwriters or the Selling Holders in
connection with such qualification and in connection with any blue sky and legal
investments memoranda; (vi) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
the sale of the Registrable Securities to be disposed of; (vii) transfer
agents', depositaries' and registrars' fees and the fees of any other agent
appointed in connection with such offering, including the fees and expenses of
any "qualified independent underwriter", or other person acting in a similar
capacity, pursuant to the requirements of the National Association of Securities
Dealers, Inc. or otherwise (the "Independent Underwriter"); (viii) all security
engraving and security printing expenses; and (ix) all fees and expenses payable
in connection with the listing of the Registrable Securities on each securities
exchange or inter-dealer quotation system on which a class of common equity
securities of the Company is then listed or on which the Registrable Securities
may be listed pursuant to Sections 6(e) and 6(h) hereof.
"Registration Notice" means written notice by any of MSLEF II,
SIBV or the Company, as the case may be, that such Person desires to initiate a
Registration Process in accordance with the terms of this Agreement.
"Registration Process" means the process of registering certain
shares of Common Stock under the Securities Act, which, for purposes of this
Agreement, shall be deemed to be the period of time from the Registration Notice
until the end of any "hold back" period required by the underwriters or, if
there is no such period, then 30 days after the Effective Date of the
registration statement; provided, however, in the event that (i) a registration
statement has not been filed with the SEC within 45 days of a Registration
Notice, (ii) such registration statement has not been declared effective by the
SEC within 75 days of its filing with the SEC, or (iii) the Registration Notice
or the registration statement has been abandoned or withdrawn by MSLEF II, SIBV
or the Company, as the case may be, then the Registration Process shall be
deemed concluded at such time.
"Rule 144" means Rule 144 (or any successor rule) promulgated
under the Securities Act (excluding Rule 144A or any successor rule promulgated
under the Securities Act).
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor statute.
"Selling Holders" shall mean any party hereto selling pursuant to
and in accordance with the terms of this Agreement.
"SIBV Holders" shall mean SIBV and any Affiliate of SIBV holding
Registrable Securities.
"The MSLEF II Fund" shall mean The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged
Equity Fund II, L.P., a Delaware limited partnership.
Section 2. Demand Registration. (a) Upon a Registration Notice
from (i) MSLEF II, on behalf of the ▇▇▇▇▇▇ Holders specified therein, to both
the Company and SIBV or (ii) SIBV, on behalf of the SIBV Holders specified
therein, to both the Company and MSLEF II, in each case in the manner set forth
in Section 12(g) hereof, requesting that the Company effect the registration
under the Securities Act of any or all of the Registrable Securities held by
such ▇▇▇▇▇▇ Holders or held by such SIBV Holders, as the case may be, and
specifying, among other things, the number of Registrable Securities which the
▇▇▇▇▇▇ Holders or the SIBV Holders, as the case may be, desire to register and
the intended method or methods of disposition of such Registrable Securities,
the Company will use its best efforts to effect (at the earliest possible date)
the registration under the Securities Act of such Registrable Securities for
disposition in accordance with the intended method or methods of disposition
stated in such request, provided, however, that the Company shall not be
required to effect an offering on a delayed or continuous basis pursuant to Rule
415 (or any successor rule to similar effect) promulgated under the Securities
Act; and provided, further, that:
(i) in the event that the Company has delivered
a Registration Notice in accordance with the provisions of
Section 3, neither MSLEF II nor SIBV may deliver a Registration
Notice pursuant to this Section 2(a) until the conclusion of such
Company Registration Process;
(ii) in the event that SIBV has delivered a
Registration Notice in accordance with the provisions of this
Section 2(a), neither MSLEF II nor the Company may deliver a
Registration Notice pursuant to this Section 2(a) until the
conclusion of such SIBV Registration Process;
(iii) in the event that MSLEF II has delivered a
Registration Notice in accordance with the provisions of this
Section 2(a), neither SIBV nor the Company may deliver a
Registration Notice until the conclusion of such MSLEF II
Registration Process; and
(iv) if, while a Registration Process is pending
pursuant to this Section 2, the Chief Financial Officer of the
Company, after consultation with outside counsel for the Company,
has determined in good faith that the filing of a registration
statement would require the disclosure of material information
which the Company has a bona fide business purpose for preserving
as confidential, the Company shall not be required to effect a
registration pursuant to this Section 2 until the earlier of (A)
the date upon which such material information is disclosed to the
public or ceases to be material, and (B) 90 days after the Chief
Financial Officer of the Company makes such good faith
determination (a "Company Delay"); provided, however, the Company
shall only be entitled to a Company Delay once in connection with
any MSLEF II Demand in any 270-day period during the term of
this Agreement and once in connection with any SIBV Demand in any
270-day period during the term of this Agreement.
(b) In the event that any registration pursuant to a request by
MSLEF II under this Section 2, shall involve, in whole or in part, an
underwritten offering, then MSLEF II shall have the right to designate one or
more nationally recognized investment banking firms as the sole managing or
co-managing underwriter(s) of such underwritten offering which may consist of or
include, at the option of MSLEF II, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
("MS&Co."). If MS&Co. shall not be the sole managing underwriter or shall be a
co-managing underwriter, then any sole or other co-managing underwriters
selected by MSLEF II shall be reasonably acceptable to the Company.
(c) MSLEF II shall have the right to effect up to but not more
than two (2) registrations and SIBV will have the right to effect up to but not
more than two (2) registrations (each such registration, whether requested by
MSLEF II or SIBV, a "Demand"), in each case, pursuant to this Section 2;
provided, however, that, without giving effect to any "cutback" imposed by any
underwriter, (i) each MSLEF II Demand shall effect the registration and sale of
at least 1,000,000 shares of Common Stock (as adjusted for any reclassification,
recapitalization, subdivision, stock dividend, stock split or combination of the
Company's outstanding securities after the date hereof) and (ii) each SIBV
Demand shall effect the registration and sale of at least an aggregate of at
least 1,000,000 shares of Common Stock (as adjusted for any reclassification,
recapitalization, subdivision, stock dividend, stock split or combination of the
Company's outstanding securities after the date hereof). MSLEF II shall have the
right to request registration and effect its two registrations (such effective
registrations, the "Initial MSLEF II Registrations") prior to SIBV delivering a
Registration Notice to MSLEF II and the Company under Section 2(a); provided
that, in the event that the Initial MSLEF II Registrations are not effected on
or prior to the third anniversary of the effectiveness of this Agreement (such
three-year period, the "MSLEF II Exclusive Period"), then SIBV may request
registration in accordance with the terms of this Agreement.
(d) Notwithstanding any other provision of this Agreement to the
contrary, a registration requested by MSLEF II or SIBV pursuant to this Section
2 shall not be deemed to have been effected for purposes of Section 2, (i)
unless it has become effective and maintained effective in accordance with
subsection 6(b), (ii) if after it has become effective such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason other than a
material misrepresentation or a material omission by MSLEF II or any of the
Selling Holders, on the one hand, or SIBV or any of the Selling Holders, on the
other, as the case may be, (iii) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection with
such registration are not satisfied other than by reason of some act or omission
by MSLEF II or any of the Selling Holders, on the one hand, or SIBV or any of
the Selling Holders, on the other, as the case may be, or (iv) unless the
registration is deemed to be an effected Demand pursuant to Section 5.
(e) In the event of any underwritten registration of Registrable
Securities in which the number of Registrable Securities requested by MSLEF II
(in the case of a MSLEF II Demand) or SIBV (in the case of a SIBV Demand) to be
included in such registration exceeds the number which the managing
underwriter(s) advise MSLEF II or SIBV, as the case may be, in writing can be
sold, then there shall be included in such registration the number of
Registrable Securities which can be sold, allocated, unless MSLEF II or SIBV, as
the case may be, notifies the Company of a different method of allocation, pro
rata among the ▇▇▇▇▇▇ Holders or the SIBV Holders, as the case may be, on the
basis of the number of Registrable Securities requested to be included therein
by each such ▇▇▇▇▇▇ ▇▇▇▇▇▇ or SIBV Holder.
(f) In connection with any Demand made by MSLEF II pursuant to
this Section 2 (in the case of SIBV, only from and after, but not before, the
expiration of the MSLEF II Exclusive Period), each of the Company and SIBV shall
have the right to cause the registration of securities for sale for its own
account (the "Piggyback Securities"), upon the written request made by the
Company and/or SIBV within 10 days after receipt of MSLEF II's Registration
Notice (which request shall specify the number of shares intended to be disposed
of and the intended method of disposition thereof), in addition to the
Registrable Securities of the ▇▇▇▇▇▇ ▇▇▇▇▇▇(s) being sold pursuant to such MSLEF
II Demand, if the number of Registrable Securities requested by MSLEF II to be
included in such registration does not exceed the number which the managing
underwriter(s) advise MSLEF II in writing can be sold; provided that in the
event the managing underwriter(s) advise MSLEF II in writing (with a copy to the
Company and SIBV) that, in their good faith opinion, inclusion of all such
Piggyback Securities would materially and adversely affect the offering and sale
of the Registrable Securities then contemplated to be sold by the ▇▇▇▇▇▇
Holders, including the per share price thereby obtainable, there shall only be
included in such registration: (1) first, all securities requested to be
included in such registration by the ▇▇▇▇▇▇ Holders, (2) second, up to the full
number of Piggyback Securities requested to be included in such registration by
the SIBV Holders (if SIBV is entitled hereunder to make such request) in excess
of the number or dollar amount of the ▇▇▇▇▇▇ Holders' Securities to be included
in such registration which, in the good faith opinion of such underwriter(s),
can be sold without materially and adversely affecting such offering (and, if
less than the full number of such Piggyback Securities, allocated pro rata among
the SIBV Holders on the basis of the number of securities requested to be
included therein by each SIBV Holder), (3) third, up to the full number of
Piggyback Securities requested to be included in such registration by the
Company in excess of the number or dollar amount of the ▇▇▇▇▇▇ Holders'
Securities and SIBV Piggyback Securities (if applicable) which, in the good
faith opinion of such underwriter(s), can be so sold without materially and
adversely affecting such offering. MSLEF II may require that any such Company
Piggyback Securities or SIBV Piggyback Securities (if applicable) be included in
the offering proposed by the ▇▇▇▇▇▇ Holders on the same terms and conditions as
such ▇▇▇▇▇▇ Holders' Registrable Securities are included therein.
(g) In connection with any Demand made by SIBV pursuant to this
Section 2, each of the Company and MSLEF II shall have the right to cause the
registration of securities for sale for its own account and, in the case of
MSLEF II, for the account of the ▇▇▇▇▇▇ Holders, upon the written request made
by the Company and/or MSLEF II within 10 days after receipt of SIBV's
Registration Notice (which request shall specify the number of shares intended
to be disposed of and the intended method of disposition thereof), in addition
to the Registrable Securities of the SIBV Holder(s) being sold pursuant to such
SIBV Demand, if the number of Registrable Securities requested by SIBV to be
included in such registration does not exceed the number which the managing
underwriter(s) advise SIBV in writing can be sold; provided that in the event
the managing underwriter(s) advise SIBV in writing (with a copy to the Company
and MSLEF II) that, in their good faith opinion, inclusion of all such Piggyback
Securities would materially and adversely affect the offering and sale of the
Registrable Securities then contemplated to be sold by the SIBV Holders,
including the per share price thereby obtainable, there shall only be included
in such registration: (1) first, all securities requested to be included in such
registration by the SIBV Holders, (2) second, up to the full number of Piggyback
Securities requested to be included in such registration by the ▇▇▇▇▇▇ Holders
in excess of the number or dollar amount of the SIBV Holders' Securities to be
included in such registration which, in the good faith opinion of such
underwriter(s), can be sold without materially and adversely affecting such
offering (and, if less than the full number of such Piggyback Securities,
allocated pro rata among the ▇▇▇▇▇▇ Holders on the basis of the number of
securities requested to be included therein by each ▇▇▇▇▇▇ ▇▇▇▇▇▇), (3) third,
up to the full number of Piggyback Securities requested to be included in such
registration by the Company in excess of the number or dollar amount of the
▇▇▇▇▇▇ Holders' Piggyback Securities and the SIBV Securities which, in the good
faith opinion of such underwriter(s), can be so sold without materially and
adversely affecting such offering. SIBV may require that any such ▇▇▇▇▇▇
Holders' Piggyback Securities or Company Piggyback Securities be included in the
offering proposed by the SIBV Holders on the same terms and conditions as such
SIBV Holders' Registrable Securities are included therein.
(h) In connection with each MSLEF II Demand, MSLEF II agrees to
use reasonable best efforts to sell or cause to be sold the lesser of (x) all
Registrable Securities that it owns at the time of such MSLEF II Demand and (y)
all Registrable Securities which the managing underwriter advises MSLEF II
pursuant to Section 2(e) can be sold in such registration; provided that
notwithstanding the foregoing, MSLEF II and any ▇▇▇▇▇▇ ▇▇▇▇▇▇ who has requested
that its Registrable Securities be included in such MSLEF II Demand shall be
under no obligation to sell its Registrable Securities pursuant to the first
MSLEF II Demand if the price per share of Common Stock on the New York Stock
Exchange or The NASDAQ National Market on the Effective Date for such MSLEF II
Demand has decreased by 5% since the date on which MSLEF II delivered its
Registration Notice with respect to such MSLEF II Demand.
(i) Concurrently with the delivery by MSLEF II of a Registration
Notice to the Company pursuant to Section 2(a), MSLEF II shall notify in writing
each of the ▇▇▇▇▇▇ Holders of its intent to cause the registration and sale of
Registrable Securities. Such notice shall offer each other ▇▇▇▇▇▇ ▇▇▇▇▇▇ the
opportunity to include in the registration such number of Registrable Securities
held by such ▇▇▇▇▇▇ ▇▇▇▇▇▇ as such ▇▇▇▇▇▇ ▇▇▇▇▇▇ may request in writing to MSLEF
II within 3 business days of receipt of MSLEF II's notice, subject to Section
2(e).
(j) Promptly (but in no event later than 2 business days) after
receipt by MSLEF II of an SIBV Registration Notice pursuant to Section 2(a),
MSLEF II shall notify in writing each of the ▇▇▇▇▇▇ Holders of its receipt of
such Registration Notice. Such notice shall offer each ▇▇▇▇▇▇ ▇▇▇▇▇▇ the
opportunity to include in the registration such number of Registrable Securities
held by such ▇▇▇▇▇▇ ▇▇▇▇▇▇ as such ▇▇▇▇▇▇ ▇▇▇▇▇▇ may request in writing to MSLEF
II within 3 business days of receipt of MSLEF II's notice, subject to Section
2(g).
Section 3. Company Registration. The Company hereby agrees not
to file a registration statement (other than a registration statement on Form
S-4 or Form S-8 or any successor forms) covering its Common Stock or any equity
securities exercisable for, convertible into or exchangeable for Common Stock,
whether or not for sale for its own account, except pursuant to the terms of
this Agreement and following delivery of a Registration Notice as hereinafter
provided. The Company may deliver a Registration Notice to MSLEF II and SIBV at
any time, provided that:
(a) in the event that MSLEF II or SIBV has delivered a
Registration Notice to the Company in accordance with the provisions of Section
2, the Company may not deliver a Registration Notice pursuant to this Section 3
until the conclusion of such MSLEF II Registration Process or SIBV Registration
Process, as the case may be; and
(b) the Company may not (i) give a Registration Notice until the
conclusion of a Company Registration Process or (ii) effect an offering on a
delayed or continuous basis of its Common Stock pursuant to Rule 415(a)(1)(ix)
or (a)(1)(x) under the Securities Act.
Section 4. Piggyback Registration. If the Company at any time
proposes to register any of its Common Stock or any equity securities
exercisable for, convertible into or exchangeable for Common Stock under the
Securities Act, whether or not for sale for its own account (such Common Stock
or other equity securities being referred to herein as the "Other Securities"),
in a manner which would permit registration of Registrable Securities for sale
to the public under the Securities Act, it will each such time give prompt
written notice to each of the ▇▇▇▇▇▇ Holders and SIBV (which notice shall, for
purposes of this Agreement, be deemed to be a Registration Notice with respect
to the registration contemplated thereby, unless a Registration Notice with
respect to such registration shall have been previously delivered by the Company
to each of the ▇▇▇▇▇▇ Holders and SIBV under this Section 4, at least 30 days
prior to the anticipated filing date of the registration statement relating to
such registration). Such notice shall offer each ▇▇▇▇▇▇ ▇▇▇▇▇▇ and, after the
MSLEF II Exclusive Period, each SIBV Holder the opportunity to include in such
registration statement such number of Registrable Securities held by such
holders as such holders may request. Upon the written request of ▇▇▇▇▇▇ Holders
(which shall be delivered to both the Company and SIBV) and/or SIBV Holders
(which shall be delivered to both the Company and MSLEF II) made within 10 days
after the receipt of the Company's notice requesting that a number of their
shares be disposed of (which request shall specify the number of Piggyback
Securities intended to be disposed of and the intended method of disposition
thereof), the Company will use its best efforts to effect, in connection with
the registration of the Other Securities, the registration under the Securities
Act of all Piggyback Securities, to the extent required to permit the
disposition (in accordance with such intended methods thereof) of the Piggyback
Securities, provided that:
(a) if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the Effective Date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register the Other Securities, the
Company may, at its election, give written notice of such determination to each
of the ▇▇▇▇▇▇ Holders and SIBV and thereupon the Company shall be relieved of
its obligation to register the Piggyback Securities in connection with the
registration of such Other Securities (but not from its obligation to pay
Registration Expenses to the extent incurred in connection therewith as provided
in Section 5 hereof), without prejudice, however, to the rights of MSLEF II or
SIBV immediately to request that such registration be effected as a registration
under Section 2 hereof (subject to the Company's right, if any and if
applicable, to a Company Delay);
(b) if the registration referred to in the first sentence of
this Section 4 is to be an underwritten registration on behalf of the Company,
and the managing underwriter(s) advise the Company in writing that in their good
faith opinion such offering would be materially and adversely affected by the
inclusion therein of the Piggyback Securities requested to be included therein,
including the per share price thereby obtainable, the Company shall only include
in such registration: (1) first, all securities the Company proposes to sell for
its own account (2) second, up to the full number of Piggyback Securities
requested to be included in such registration by the ▇▇▇▇▇▇ Holders in excess of
the number or dollar amount of Company Securities which, in the good faith
opinion of such underwriter(s), can be so sold without materially and adversely
affecting such offering (and, if less than the full number of such Piggyback
Securities, allocated pro rata among the ▇▇▇▇▇▇ Holders on the basis of the
number of securities requested to be included therein by each ▇▇▇▇▇▇ ▇▇▇▇▇▇),
(3) third, up to the full number of Piggyback Securities requested to be
included in such registration by SIBV Holders in excess of the number or dollar
amount of Company Securities and ▇▇▇▇▇▇ Piggyback Securities which, in the good
faith opinion of such underwriter(s), can be sold without materially and
adversely affecting such offering (and, if less than the full number of such
Piggyback Securities, allocated pro rata among the SIBV Holders on the basis of
the number of securities requested to be included therein by each SIBV Holder)
and (4) fourth, an amount of Other Securities (other than the securities the
Company proposes to sell for its own account), if any, requested to be included
therein in excess of the number or dollar amount of the securities the Company
proposes to sell for its own account and Piggyback Securities which, in the
opinion of such underwriter(s), can be so sold without materially and adversely
affecting such offering (allocated among the holders of such Other Securities in
such proportions as such holders and the Company may agree);
(c) the Company shall not be required to effect any registration
of Registrable Securities held by any Selling Holder under this Section 4
incidental to the registration of any of its securities in connection with
mergers, acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or stock option or other employee benefit plans;
(d) no registration of Registrable Securities effected under
this Section 4 shall relieve the Company of its obligation to effect a
registration of other Registrable Securities pursuant to Section 2 hereof;
(e) a Selling Holder may withdraw all or any part of such
Holder's Piggyback Securities from the proposed registration at any time prior
to the later of (i) the Effective Date of the related registration statement and
(ii) the execution of any underwriting agreement related thereto; and
(f) the Company may require that any Piggyback Securities be
included in the offering proposed by the Company on the same terms and
conditions as the Company Securities are included therein, provided the terms of
any underwriting agreement are consistent with the terms of this Agreement.
Section 5. Expenses. The Company will pay all Registration
Expenses in connection with (i) MSLEF II's two effected demand registrations of
▇▇▇▇▇▇ Holders' Registrable Securities pursuant to Section 2(a), (ii) SIBV's two
effected demand registrations of SIBV Holders' Registrable Securities pursuant
to Section 2(a) and (iii) all registrations of Selling Holders' Registrable
Securities pursuant to Section 4, except that with respect to any such
registration the Company shall not be obligated to pay underwriting discounts or
commissions or transfer taxes, if any, relating to the sale or disposition of
Selling Holders' Registrable Securities. In the event MSLEF II or SIBV
withdraws a Registration Notice or the ▇▇▇▇▇▇ Holders or the SIBV Holders
abandon a registration statement or otherwise do not sell Registrable Securities
following a Registration Notice, then all Registration Expenses in respect of
such Registration Notice shall be borne by the Selling Holders; provided,
however, in the event of a Company Delay following which the Selling Holders
decide by notice in writing to the Company not to sell Registrable Securities,
the Company will pay all Registration Expenses and such shall not be deemed to
be a Demand for purposes of this Agreement. The Company will also pay all
Registration Expenses in connection with any registration of Registrable
Securities that is demanded by MSLEF II or SIBV pursuant to Section 2(a) but
that, because of any of the reasons described in clauses (i), (ii) or (iii) of
Section 2(d), is not deemed to have been effected.
Section 6. Registration and Qualification. If and whenever the
Company is required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 2 or 4
hereof, the Company will as promptly as is practicable:
(a) prepare and file with the SEC, as soon as possible, and use
its best efforts to cause to become effective, a registration statement under
the Securities Act relating to the Registrable Securities to be offered on such
form as MSLEF II or SIBV, as the case may be, or if not filed pursuant to a
Demand, the Company, determines and for which the Company then qualifies;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
until the earlier of such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition set forth in
such registration statement or the expiration of nine months (or six months in
the event of a registration statement on Form S-1 (or any successor "long-form"
registration statement)) after such registration statement becomes effective;
provided that such six or nine month period shall be extended in the case of a
Demand for such number of days that equals the number of days elapsing from (i)
the date the written notice contemplated by Section 6(g) hereof is given by the
Company to (ii) the date on which the Company delivers to the Selling Holders
the supplement or amendment contemplated by Section 6(g) hereof;
(c) furnish to the Selling Holders and to any underwriter of
Registrable Securities such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included in
such registration statement (including each preliminary prospectus and any
summary prospectus), in conformity with the requirements of the Securities Act,
such documents incorporated by reference in such registration statement or
prospectus, and such other documents, as the Selling Holders or such underwriter
may reasonably request, and, if requested, a copy of any and all transmittal
letters or other correspondence to, or received from, the SEC or any other
governmental agency or self-regulatory body or other body having jurisdiction
(including any domestic or foreign securities exchange) relating to such
offering;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of such registration statement at the
earliest possible moment;
(e) subject to Section 14, use its best efforts to register or
qualify all Registrable Securities covered by such registration statement under
the securities or blue sky laws of such jurisdictions (domestic or foreign), and
to list or qualify for such securities exchanges and other trading markets, as
MSLEF II or SIBV, as the case may be, or any underwriter of Registrable
Securities shall request, and use its best efforts to obtain all necessary
registrations, permits and consents required in connection therewith, and do any
and all other acts and things which are reasonably requested to enable the
Selling Holder or any such underwriter to consummate the disposition in such
jurisdictions of the Registrable Securities covered by such registration
statement, except that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified, or to consent to general service of process in
any such jurisdiction;
(f) if requested by MSLEF II or SIBV, as the case may be, (i)
furnish to each Selling Holder an opinion of counsel for the Company addressed
to each Selling Holder and dated the date of the closing under the underwriting
agreement (if any) (or if such offering is not underwritten, dated the effective
date of the registration statement), and (ii) use its best efforts to furnish to
each Selling Holder a "cold comfort" letter addressed to each Selling Holder and
signed by the independent public accountants who have audited the Company's
financial statements included in such registration statement, in each such case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and such other
matters as the Selling Holders may reasonably request and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements;
(g) immediately notify the Selling Holders in writing (i) at any
time when a prospectus relating to a registration pursuant to Section 2 or 4
hereof is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) of any request by the SEC or any other regulatory
body or other body having jurisdiction for any amendment of or supplement to any
registration statement or other document relating to such offering, and in
either such case (i) or (ii) at the request of the Selling Holders prepare and
furnish to the Selling Holders a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(h) subject to Section 14, use its best efforts to list all such
Registrable Securities covered by such registration on each securities exchange
and inter-dealer quotation system on which a class of common equity securities
of the Company is then listed (and on each exchange and inter-dealer quotation
system requested by MSLEF II), and to pay all fees and expenses in connection
therewith; and
(i) furnish unlegended certificates representing ownership of
the Registrable Securities being sold in such denominations and registered to
such persons or nominees as shall be requested by the Selling Holders or the
underwriters.
Section 7. Termination. This Agreement shall terminate upon the
earlier of: (i) the mutual agreement of the parties hereto; and (ii) December
31, 2010. The rights and obligations of the ▇▇▇▇▇▇ Holders shall also terminate
after the ▇▇▇▇▇▇ Holders cease to own, in the aggregate, at least 1,000,000
shares of Common Stock (not taking into account any shares purchased after the
date hereof). The rights and obligations of the SIBV Holders shall also
terminate after the SIBV Holders cease to own, in the aggregate, at least
1,000,000 shares of Common Stock (not taking into account any shares purchased
after the date hereof other than shares purchased by an SIBV Holder from a
▇▇▇▇▇▇ ▇▇▇▇▇▇). Notwithstanding the foregoing, the provisions of Section 5, 6,
10 and 12 shall survive any such termination of this Agreement or the rights and
obligations of the ▇▇▇▇▇▇ Holders or the SIBV Holders, as the case may be.
Section 8. Underwriting; Due Diligence, Etc. (a) If requested
by the underwriters for any underwritten offering of Registrable Securities
pursuant to a registration requested under this Agreement, the Company will
enter into an underwriting agreement with such underwriters for such offering,
which, (x) in the case of a ▇▇▇▇▇▇ Demand, shall be in form reasonably
acceptable to MSLEF II and (y) in the case of a SIBV Demand, shall be in form
reasonably acceptable to SIBV, and which, in the case of a Company Registration
Process, shall be in form reasonably acceptable to the Company, any such
agreement to contain such representations and warranties by the Company and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, indemnities and contribution (provided that any indemnities and
contribution shall, unless MSLEF II or the Agent (as defined below) or SIBV, as
the case may be, agrees otherwise, be to the effect and only to the extent
provided in Section 10 hereof) and the provision of opinions of counsel and
accountants' letters to the effect and to the extent provided in Section 6(e)
hereof; provided, however, the Company may negotiate and agree to differing
indemnification obligations with respect to the underwriters, provided such
indemnification obligations (i) do not adversely affect the Selling Holders with
respect to their rights and obligations hereunder and (ii) shall not excuse the
Company from entering into (or delaying the execution of) an underwriting
agreement on the terms as provided herein. The Selling Holders on whose behalf
the Registrable Securities are to be distributed by such underwriters shall be
parties to any such underwriting agreement, and the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters, shall also be made to and for the benefit of
such Selling Holders. In no event shall any Selling Holder be required to make
any representation or warranty, other than as to its ownership of the
Registrable Securities and as to due authorization, execution and enforceability
with respect to it of the underwriting agreement. Such underwriter shall be
instructed to use its reasonable best efforts to affect a wide distribution of
the Common Stock so long as doing so shall not, in any manner, adversely affect
the marketing (including timing) or price of such shares. The Company, if
requested by MSLEF II or SIBV, as the case may be, or the underwriters, will
enter into an agreement with the Independent Underwriter on customary terms.
(b) In the event that any registration pursuant to Section 4
shall involve, in whole or in part, an underwritten offering, the Company may
require the Registrable Securities requested to be registered pursuant to
Section 4 to be included in such underwriting on the same terms and conditions
as shall be applicable to the other securities being sold through underwriters
under such registration.
(c) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act, the Company will give the Selling Holders and the underwriters, if any, and
their respective counsel and accountants, such reasonable and customary access
to its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified the Company's financial statements as shall be necessary, in the
reasonable opinion of such Selling Holder and such underwriters or their
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act. The Selling Holders and the underwriters, if any, and their
respective counsel and accountants, shall use their reasonable best efforts to
coordinate and time their review so as to not unreasonably interfere with the
business and operations of the Company. Such information shall be governed by
confidentiality provisions comparable to those set forth in the Stockholders
Agreement.
(d) In the event an offering pursuant to this Agreement is not
underwritten, the Company, at the request of MSLEF II or the Agent or SIBV, as
the case may be, will enter into such agreements with any selling agents or
similar persons as are customary. Such agreements shall contain terms and
provisions analogous to those described herein and, to the extent not so
described, customary terms and provisions.
Section 9. Restrictions on Public Sale; Inconsistent Agreements.
(a) If any registration of (i) Registrable Securities pursuant to Section 2
shall be in connection with an underwritten public offering, the Company, SIBV,
MSLEF II, Equity Investors, First Plaza and Leeway (as to themselves severally
and, except in the case of First Plaza or Leeway, as to their respective
Affiliates) agree not to, or (ii) Common Stock pursuant to Section 3 or 4 shall
be in connection with an underwritten public offering, SIBV, MSLEF II, Equity
Investors, First Plaza and Leeway (as to themselves severally and, except in the
case of First Plaza or Leeway, as to their respective Affiliates) agree not to,
effect any public sale or distribution including any sale pursuant to Rule 144
(except as part of such registration), of any of the Company's common equity
securities or of any security convertible into or exchangeable or exercisable
for any equity security of the Company (other than any such sale or distribution
of such securities in connection with any exchange offer, merger or
consolidation by the Company or a subsidiary of the Company or in connection
with the purchase of all or substantially all the assets of any other person or
in connection with an employee stock option or other benefit plan) during the 30
days prior to, and during the 180 day period beginning on, the Effective Date of
such registration statement, or for such shorter period required by the
underwriters of such offering; provided, however, that MSLEF II can waive any of
the foregoing obligations of any party in the case of any MSLEF II Demand and
SIBV can waive any of the foregoing obligations of any party in the case of any
SIBV Demand. For purposes of this Section 9, Leeway shall mean and be limited
to State Street Bank & Trust Company, as trustee for the Long Term Investment
Trust and any successor thereto and any investment advisor or manager with
discretionary investment authority with respect to the Registrable Securities
presently held by Leeway, including any affiliate of ▇.▇. ▇▇▇▇▇▇ & Co., Inc.
with discretionary investment authority with respect to such Registrable
Securities.
(b) The Company agrees (1) without the written consent of the
managing underwriters, not to effect any public or private sale or distribution
of the Company's common equity securities or any security convertible into or
exchangeable or exercisable for any equity security of the Company, including a
sale pursuant to Regulation D under the Securities Act, during a MSLEF II
Registration Process or a SIBV Registration Process (except (i) as part of such
underwritten registration or pursuant to registrations on Form S-4 or Form S-8
or any successor forms; or (ii) equity securities issued pursuant to the
conversion or exchange of any securities convertible into or exchangeable for
the Company's common equity securities and which were outstanding prior to the
commencement of the Registration Process, and (2) to use its best efforts to
cause each holder of its privately placed securities purchased from the Company
at any time on or after the date of this Agreement to agree not to effect any
public sale or distribution of any such securities during such period, including
a sale pursuant to Rule 144 (except as part of such underwritten registration,
if permitted).
Section 10. Indemnification and Contribution. (a) In the case
of each offering of Registrable Securities made pursuant to this Agreement, the
Company agrees to indemnify and hold harmless each Selling Holder, its partners
or trustees, each underwriter of Registrable Securities so offered, each person,
if any, who controls any of the foregoing persons within the meaning of the
Securities Act, and the officers, directors, trustees, beneficiaries and
advisors of any of the foregoing from and against any and all claims,
liabilities, losses, damages, expenses and judgments, joint or several, to which
they or any of them may become subject, under the Securities Act or otherwise,
including any amount paid in settlement of any litigation commenced or
threatened, and shall promptly reimburse them, as and when incurred, for any
legal or other expenses incurred by them in connection with investigating any
claims and defending any actions, insofar as such losses, claims, damages,
liabilities or actions shall arise out of, or shall be based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement (or in any preliminary or final prospectus included
therein) or in any offering memorandum or other offering document relating to
the offering and sale of such Registrable Securities, or any amendment thereof
or supplement thereto, or in any document incorporated by reference therein, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
shall arise out of or be based upon any violation or alleged violation by the
Company of the Securities Act, any blue sky laws, securities laws or other
applicable laws of any state or country in which the Registrable Securities are
offered and relating to action or inaction required of the Company in connection
with such offering; provided, however, that the Company shall not be liable to a
particular Selling Holder in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement, or any omission or alleged omission, if
such statement or omission shall have been made in reliance upon and in
conformity with information relating to such Selling Holder furnished to the
Company in writing by or on behalf of such Selling Holder expressly for use in
the preparation of the registration statement (or in any preliminary or final
prospectus included therein), offering memorandum or other offering document, or
any amendment thereof or supplement thereto or a document incorporated by
reference in any of the foregoing. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of a Selling
Holder and shall survive the transfer of such securities. The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to each Selling Holder, its partners, underwriters of the
Registrable Securities, any controlling person of any of the foregoing or any
officer or director of any of the foregoing.
(b) In the case of each offering made pursuant to this
Agreement, each Selling Holder included in such offering, by exercising its
registration rights hereunder, agrees to indemnify and hold harmless the Company
and each person, if any, who controls the Company within the meaning of the
Securities Act (and if requested by the underwriters, each underwriter who
participates in the offering and each person, if any, who controls any such
underwriter within the meaning of the Securities Act), and the officers and
directors of any of the foregoing from and against any and all claims,
liabilities, losses, damages, expenses and judgments, joint or several, to which
they or any of them may become subject, under the Securities Act or otherwise,
including any amount paid in settlement of any litigation commenced or
threatened, and shall promptly reimburse them, as and when incurred, for any
legal or other expenses incurred by them in connection with investigating any
claims and defending any actions, insofar as any such losses, claims, damages,
liabilities or actions shall arise out of, or shall be based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement (or in any preliminary or final prospectus included
therein) or in any offering memorandum or other offering document relating to
the offering and sale of such Registrable Securities, or any amendment thereof
or supplement thereto, or in any document incorporated by reference therein, or
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that such untrue statement of a material fact is
contained in, or such material fact is omitted from, information relating to
such Selling Holder furnished in writing to the Company by or on behalf of such
Selling Holder expressly for use in the preparation of such registration
statement (or in any preliminary or final prospectus included therein), offering
memorandum or other offering document or a document incorporated by reference in
any of the foregoing. The foregoing indemnity is in addition to any liability
which such Selling Holder may otherwise have to the Company, or any of its
directors, officers or controlling persons. In no event shall the liability of
a Selling Holder hereunder be greater in amount than the dollar amount of the
net proceeds received by it upon the sale of the Registrable Securities pursuant
to such offering.
(c) Each party indemnified under paragraph (a) or (b) of this
Section 10 shall, promptly after receipt of notice of any claim or the
commencement of any action against such indemnified party in respect of which
indemnity may be sought, notify the indemnifying party in writing of the claim
or the commencement thereof; provided that the failure of the indemnified party
to notify the indemnifying party shall not relieve the indemnifying party from
any liability which it may have to an indemnified party on account of the
indemnity agreement contained in paragraph (a) or (b) of this Section 10, unless
the indemnifying party was materially prejudiced by such failure, and in no
event shall relieve the indemnifying party from any other liability which it may
have to such indemnified party. If any such claim or action shall be brought
against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein, and,
to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel satisfactory to
the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or action,
the indemnifying party shall not be liable (except to the extent the proviso to
this sentence is applicable, in which event it will be so liable) to the
indemnified party under this Section 10 for any legal expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided that each indemnified party
shall have the right to employ separate counsel to represent it and assume its
defense (in which case, the indemnifying party shall not represent it) if, in
the reasonable judgment of such indemnified party, (i) upon the advice of
counsel, the representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, or
(ii) in the event the indemnifying party has not assumed the defense thereof
within 10 days of receipt of notice of such claim or commencement of action, and
in which case the fees and expenses of one such separate counsel shall be paid
by the Company. The indemnifying party shall not be responsible for providing
indemnification with respect to any settlement agreement which is not approved
by it prior to its execution, such approval not to be unreasonably withheld. If
the indemnifying party so assumes the defense thereof, it may not agree to any
settlement of any such claim or action (i) as the result of which any remedy or
relief, other than monetary damages for which the indemnifying party shall be
responsible hereunder, shall be applied to or against the indemnified party, or
(ii) unless such settlement includes an unconditional release of liability in
favor of the indemnified party, in each case without the prior written consent
of the indemnified party. In any action hereunder as to which the indemnifying
party has assumed the defense thereof with counsel satisfactory to the
indemnified party, the indemnified party shall continue to be entitled to
participate in the defense thereof, with counsel of its own choice, but, except
as set forth above, the indemnifying party shall not be obligated hereunder to
reimburse the indemnified party for the costs thereof.
(d) If the indemnification provided for in this Section 10 shall
for any reason be unavailable to an indemnified party in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, in such proportion as shall be appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party on the one hand or the indemnified party on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission,
but not by reference to any indemnified party's stock ownership in the Company.
In no event, however, shall a Selling Holder be required to contribute in excess
of the amount of the net proceeds received by such Selling Holder in connection
with the sale of Registrable Securities in the offering which is the subject of
such loss, claim, damage or liability. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or action
in respect thereof, referred to above in this paragraph shall be deemed to
include, for purposes of this paragraph, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 12(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 11. Rule 144. The Company shall take such measures and
file such information, documents and reports as shall be required by the SEC as
a condition to the availability of Rule 144 and Rule 144A (or any successor
provisions).
Section 12. Miscellaneous. (a) Injunctions. Irreparable damage
would occur in the event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was otherwise breached.
Therefore, the parties hereto shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court having jurisdiction,
such remedy being in addition to any other remedy to which they may be entitled
at law or in equity.
(b) Severability. If any term or provision of this Agreement is
held by a court of competent jurisdiction to be invalid, void, or unenforceable,
the remainder of the terms and provisions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term or provision.
(c) Further Assurances. If any term or provision of this
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms and provisions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term or provision.
(d) Waivers, Etc. No failure or delay on the part of any party
hereto (or the intended third party beneficiaries referred to herein) in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Agreement
nor consent to any departure therefrom shall in any event be effective unless
the same shall be in writing, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. Any waiver
agreed to by MSLEF II shall be binding upon the ▇▇▇▇▇▇ Holders.
(e) Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof. The
section headings contained in this Agreement are solely for the purpose of
reference, and shall not in any way affect the meaning or interpretation of this
Agreement. This Agreement shall not be amended or modified except by written
instrument executed by the parties hereto; provided that the Company and MSLEF
II may amend this Agreement (A) without the consent of the other parties hereto
(other than SIBV) and (B) without the consent of SIBV (in its capacity as a
party to this Agreement, as opposed to any ability it may have to direct the
Company) so long as (i) such amendment does not directly or indirectly adversely
affect the rights or obligations of SIBV hereunder or SIBV other than in its
capacity as a stockholder of the Company or (ii) SIBV owns less than 5% of the
outstanding voting securities of the Company; provided, further that the Company
and SIBV may amend this Agreement (A) without the consent of the other parties
hereto (other than MSLEF II) and (B) without the consent of MSLEF II (in its
capacity as a party to this Agreement, as opposed to any ability it may have to
direct the Company) so long as such amendment does not directly or indirectly
adversely affect the rights or obligations of any ▇▇▇▇▇▇ ▇▇▇▇▇▇ or its
Affiliates hereunder or any ▇▇▇▇▇▇ ▇▇▇▇▇▇ and its Affiliates other than in their
capacities as stockholders of the Company. Any amendment agreed to by MSLEF II
shall be binding upon the ▇▇▇▇▇▇ Holders.
(f) Counterparts. For the convenience of the parties, this
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original but all of which together shall be one and the same
instrument.
(g) Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be validly given,
made or served, if in writing and delivered personally, by facsimile or sent by
registered mail, postage prepaid as follows:
(i) if to MSLEF II or any ▇▇▇▇▇▇ ▇▇▇▇▇▇, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged Equity Fund II, Inc.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Partners
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to SIBV or any SIBV Holder, to:
Smurfit International ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ 1077ZZ, The Netherlands
Attention: Rokin Corporate Services B.V.
Fax No.: ▇▇▇-▇▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇
Attention: Houghton Fry, Esq.
Fax: ▇▇▇-▇-▇▇▇-▇▇▇▇
(iii) if to the Company, to:
Jefferson Smurfit Corporation
Jefferson Smurfit Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.,
Vice President and General Counsel
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as any party may, from time to time, designate in a
written notice in a like manner; provided that notices of a change of address
shall be effective only upon receipt thereof. Notice given by facsimile shall
be deemed delivered five calendar days after the date the same is mailed.
(h) WAIVER OF JURY TRIAL, ETC. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. THE PARTIES AGREE, SOLELY IN RESPECT OF THE INTERPRETATION
AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT, TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF, AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE FEDERAL OR STATE
COURTS LOCATED IN, THE COUNTY OF NEW YORK, STATE OF NEW YORK. SERVICE OF
PROCESS IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
EFFECTIVE IF DELIVERED OR SENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION
12(G) HEREOF.
(i) Assignment. Except as provided herein, the parties may not
assign their rights under this Agreement; provided that (x) any ▇▇▇▇▇▇ ▇▇▇▇▇▇
may assign and delegate its rights and obligations under this Agreement to any
other ▇▇▇▇▇▇ ▇▇▇▇▇▇ and (y) First Plaza Group Trust and Leeway & Co. shall have
the right to assign this Agreement to one or more successor trustees, plans or
nominees for, or successors by reorganization of, a qualified pension trust.
The Company may not delegate its obligations under this Agreement. Any action
required or permitted to be taken by the ▇▇▇▇▇▇ Holders pursuant to this
Agreement shall be taken by MSLEF II. Subject to Section 12(e), any ▇▇▇▇▇▇
▇▇▇▇▇▇ or SIBV Holder that is not a party hereto shall be a third party
beneficiary of the rights granted under this Agreement (provided that the
ability of such Person to exercise the registration rights set forth herein
shall be subject to the obligations imposed on such Person under this Agreement)
as of and after the time, if any, as may be provided in any agreement between
MSLEF II and such ▇▇▇▇▇▇ ▇▇▇▇▇▇ or SIBV Holder, as the case may be.
Section 13. Representations and Warranties. (a) SIBV represents
to the other parties hereto that it is duly incorporated and validly existing as
a corporation under the laws of The Netherlands; that it has the power and
authority under its articles of incorporation or similar charter document to
enter into and perform this Agreement; that the execution of this Agreement by
it has been duly authorized by all required corporation actions; that the
consummation of the transactions contemplated hereunder will not result in a
breach or violation of, or a default under, its certificate of incorporation (or
similar charter document) or by-laws, or any material agreement by which it is
subject, nor require the obtaining of any consent, approval, permit or license
from or filing with, any governmental authority or other Person by it in
connection with the execution, delivery and performance by it of this Agreement,
except for violations which would not, or consents or filings which, if not
obtained or made, would not, in the aggregate, affect materially and adversely
the business, financial condition or results of operation of SIBV and its
subsidiaries, taken as a whole; that this Agreement constitutes (assuming its
due authorization and execution by the other parties hereto) its legal, valid
and binding obligation; and that, as of the date hereof, it and its Affiliates
beneficially own, in the aggregate, the number of shares of Common Stock of the
Company set forth opposite its name on Schedule I attached hereto.
(b) Each of The MSLEF II Fund and Equity Investors represents to
the other parties hereto that it is a limited partnership duly organized and
validly existing under the laws of its jurisdiction of organization; that it has
the power and authority under its agreement of limited partnership to enter into
and perform this Agreement; that the execution of this Agreement by it has been
duly authorized by all required partnership action; that the consummation of the
transactions contemplated hereunder will not result in a breach or violation or,
or a default under, its agreement of limited partnership or under any agreement
of partnership of the general partner, or any material agreement by which it or
any of its properties or any of its general partner's properties is bound or any
statute, rule, regulation, order or other law to which it is subject, nor
require the obtaining of any consent, approval, permit or license from or filing
with, any governmental authority or other Person by MSLEF II or Equity
Investors, respectively, in connection with the execution, delivery and
performance by it of this Agreement, except for violations which would not, or
consents or filing which, if not obtained or made, would not, in the aggregate,
affect materially and adversely the business, financial condition or results of
operation of MSLEF II and its subsidiaries, taken as a whole, respectively; that
this Agreement constitutes (assuming its due authorization and execution by the
other parties hereto) its legal, valid and binding obligation; and that, as of
the date hereof, it beneficially owns the number of shares of Common Stock of
the Company set forth opposite its name on Schedule I attached hereto.
(c) Each of MSLEF II and Equity Investors Inc. represents to the
other parties hereto that it is duly incorporated and validly existing as a
corporation under the laws of the state of its incorporation, and is in good
standing therein; that it has the power and authority under its certificate of
incorporation to enter into and perform this Agreement; that the execution of
this Agreement by it has been duly authorized by all required corporate actions;
that the consummation of the transactions contemplated hereunder will not result
in a breach or violation of, or a default under, its certificate of
incorporation, its by-laws, or any material agreement by which it or any of its
properties is bound or any statute, rule, regulation, order or other law to
which it is subject, nor require the obtaining of any consent, approval, permit
or license from, or filing with, any governmental authority or other Person by
MSLEF II, Inc. or Equity Investors Inc., respectively, in connection with the
execution, delivery and performance by it of this Agreement, except for
violations which would not, or consents or filings which, if not obtained or
made, would not, in the aggregate, affect materially and adversely the business,
financial condition or results of operation of MSLEF II, Inc. and its
subsidiaries, taken as a whole, or Equity Investors Inc. and its subsidiaries,
taken as a whole, respectively; that this Agreement constitutes (assuming its
due authorization and execution by the other parties hereto) its legal, valid
and binding obligation; and that, as of the date hereof, it beneficially owns
the number of shares of Common Stock of the Company set forth opposite its name
Schedule I attached hereto.
(d) The Company represents to the other parties hereto that it
is duly incorporated and validly existing as a corporation under the laws of the
state of Delaware, and is in good standing therein; that it has the power and
authority under its certificate of incorporation to enter into and perform this
Agreement; that the execution of this Agreement by it has been duly authorized
by all required corporate actions; that the consummation of the transactions
contemplated hereunder will not result in a breach or violation of, or a default
under, its certificate or incorporation, its by-laws, or any material agreement
by which it or any of its properties is bound or any statute, rule, regulation,
order or other law to which it is subject, nor require the obtaining of any
consent, approval, permit or license from, or filing with, any governmental
authority or other Person by the Company in connection with the execution,
delivery and performance by it of this Agreement, except for violations which
would not, or consents or filings which, if not obtained or made, would not, in
the aggregate, affect materially and adversely the business, financial condition
or results of operations of the Company and its subsidiaries, taken as a whole;
that this Agreement constitutes (assuming its due authorization and execution by
the other parties hereto) its legal, valid and binding obligation.
(e) First Plaza represents and warrants to the other parties
hereto that it has the full power and authority to execute and deliver this
Agreement; that this Agreement has been duly authorized, executed and delivered
by First Plaza and constitutes (assuming its due authorization and execution by
the other parties hereto) its legal, valid and binding obligation; and that, as
of the date hereof, it beneficially owns the number of shares of Common Stock of
the Company set forth opposite its name on Schedule I attached hereto.
(f) Leeway represents and warrants to the other parties hereto
that it has the full power and authority to execute and deliver this Agreement;
that this Agreement has been duly authorized, executed and delivered by Leeway
and constitutes (assuming its due authorization and execution by the other
parties hereto) its legal, valid and binding obligation; and that, as of the
date hereof, it beneficially owns the number of shares of Common Stock of the
Company set forth opposite its name on Schedule I attached hereto (except that
Leeway acts as nominee for State Street Bank and Trust Company and Trust Company
as Trustee for The Long Term Investment Trust).
Section 14. Ireland Listing. Notwithstanding anything herein to
the contrary, without the prior written consent of SIBV, neither MSLEF II nor
any underwriter may require the Company to, and the Company shall not, effect
the listing of any Registrable Securities on the Irish Stock Exchange.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
SMURFIT INTERNATIONAL B.V.
By: /s/ Houghton Fry
-------------------------------------
Name: Houghton Fry
Title: Attorney-in-Fact
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LEVERAGED EQUITY FUND II, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged Equity
Fund II, Inc. (general partner)
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice Chairman
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
SIBV/MS EQUITY INVESTORS, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Equity Investors Inc.
(general partner)
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice Chairman
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ EQUITY
INVESTORS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice Chairman
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LEVERAGED
EQUITY HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice Chairman
FIRST PLAZA GROUP TRUST
By: Mellon Bank, N.A., solely in its
capacity as trustee for First Plaza
Group Trust (as directed by General
Motors Investment Management
Corporation) and not in its
individual capacity
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Authorized Signatory
LEEWAY & CO.
By: State Street Bank and Trust Company,
a partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Secretary
JEFFERSON SMURFIT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Chief
Financial Officer
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LEVERAGED
EQUITY FUND, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice Chairman
SCHEDULE I
Stockholder Name Shares
------------------------------------------------------------- ----------
Smurfit International B.V. and subsidiaries 51,638,462
The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged Equity Fund II, L.P. 30,527,880
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged Equity Fund II, Inc. 1,046,660
SIBV/MS Equity Investors, L.P. 225,460
First Plaza Group Trust 5,000,000
Leeway & Co. 3,000,000
EXHIBIT G
AFFILIATE'S LETTER
____________, 1998
Jefferson Smurfit Corporation
Jefferson Smurfit Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Stone Container Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned has been advised that as of the date of this
letter the undersigned may be deemed to be an "affiliate" of Stone Container
Corporation, a Delaware corporation ("Stone"), as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Act"). Pursuant to the terms of the Agreement and Plan of Merger dated
as of May 10, 1998 (the "Agreement") among Stone, Jefferson Smurfit
Corporation, a Delaware corporation ("JSC"), and JSC Acquisition Corporation,
a Delaware corporation and a wholly owned subsidiary of JSC ("Merger
Subsidiary"), Merger Subsidiary will be merged with and into Stone with Stone
to be the surviving corporation in the merger (the "Merger").
As a result of the Merger, the undersigned will receive shares
of Common Stock, par value $0.01 per share, of JSC (the "JSC Common Stock") in
exchange for shares owned by the undersigned of Common Stock, par value $0.01
per share, of Stone (the "Stone Common Stock").
The undersigned represents, warrants and covenants to JSC and
Stone that as of the date the undersigned receives any JSC Common Stock as a
result of the Merger:
A. The undersigned shall not make any sale, transfer or other
disposition of the JSC Common Stock in violation of the Act or the Rules
and Regulations.
B. The undersigned has carefully read this letter and the
Agreement and discussed the requirements of such documents and other
applicable limitations upon the undersigned's ability to sell, transfer or
otherwise dispose of the JSC Common Stock to the extent the undersigned
felt necessary with the undersigned's counsel or counsel for Stone.
C. The undersigned has been advised that the issuance of JSC
Common Stock to the undersigned pursuant to the Merger will be registered
with the Commission under the Act on a Registration Statement on Form S-4.
However, the undersigned has also been advised that, since at the time the
Merger is submitted for a vote of the stockholders of Stone, the
undersigned may be deemed to be an affiliate of Stone, the undersigned may
not sell, transfer or otherwise dispose of the JSC Common Stock issued to
the undersigned in the Merger unless (i) such sale, transfer or other
disposition has been registered under the Act, (ii) such sale, transfer or
other disposition is made in conformity with Rule 145 promulgated by the
Commission under the Act, or (iii) in the opinion of counsel reasonably
acceptable to JSC, or pursuant to a "no action" letter obtained by the
undersigned from the staff of the Commission, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
D. The undersigned understands that JSC is under no
obligation to register the sale, transfer or other disposition of the JSC
Common Stock by the undersigned or on the undersigned's behalf under the
Act or to take any other action necessary in order to enable such sale,
transfer or other disposition by the undersigned in compliance with an
exemption from such registration.
E. The undersigned also understands that there will be
placed on the certificates for the JSC Common Stock issued to the
undersigned or any substitution thereof, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF ONLY IN ACCORDANCE WITH THE TERMS OF A LETTER AGREEMENT
BETWEEN THE REGISTERED HOLDER HEREOF AND JEFFERSON SMURFIT
CORPORATION , A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF JEFFERSON SMURFIT CORPORATION."
F. The undersigned also understands that unless the
transfer by the undersigned of the undersigned's JSC Common Stock has been
registered under the Act or is a sale made in conformity with the
provisions of Rule 145 under the Act, JSC reserves the right to put the
following legend on the certificates issued to the undersigned's
transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SECURITIES IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SECURITIES HAVE NOT BEEN ACQUIRED BY THE HOLDER
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT
OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in
paragraphs E and F above shall be removed by delivery of substitute
certificates without such legend if (i) the securities represented thereby
have been registered for sale by the undersigned under the 1933 Act or (ii)
JSC has received either an opinion of counsel, which opinion and counsel shall
be reasonably satisfactory to JSC, or a "no-action" letter obtained by the
undersigned from the staff of the Commission, to the effect that the
restrictions imposed by Rule 145 under the Act no longer apply to the
undersigned.
G. The undersigned further understands and agrees that the
representations, warranties, covenants and agreements of the undersigned
set forth herein are for the benefit of JSC, Stone and the Surviving
Corporation (as defined in the Merger Agreement) and will be relied upon by
such entities and their respective counsel and accountants.
H. The undersigned understands and agrees that this letter
agreement shall apply to all shares of the capital stock of JSC and Stone
that are deemed to be beneficially owned by the undersigned pursuant to
applicable federal securities laws.
Execution of this letter should not be considered an
admission on the part of the undersigned that the undersigned is an
"affiliate" of Stone as described in the first paragraph of this letter or
as a waiver of any rights the undersigned may have to object to any claim
that the undersigned is such an affiliate on or after the date of this
letter.
Very truly yours,
By:
-----------------------------
Name:
Accepted this ____ day of
____________, 1998.
JEFFERSON SMURFIT
CORPORATION
By:
-------------------------------
Name:
Title: